Price hinted at a double-bottom forming (1 and 2), and then the plummeted below both lows (3) taking out what would have no doubt been a plethora of stops betting on the bounce.
The retrace back up to 4 would have had new sellers joining (shown on the 4-hour chart below), but it wasn’t meant to be – more stops caught offside as price pushed strongly again above 1.1300.
Tough week on the EURUSD! Where to from here? Let’s have a look at that 4-hour chart for some clues:
Notice the bearish rejection candles attempting to sell-off below 1.1300. The second one, in particular, looks very bearish. Price then dropped a little lower, giving the bears hope, briefly, only to fly up and take them out too.
EURUSD and GBPUSD are very choppy at the moment. If I had to trade EU (and I don’t and here is a little secret, neither to do you), I would look for a bounce on the 4-hour at about 1.1370 while the bulls seem to be in control.
The Kiwi is looking strong, perhaps a bit overextended, but there is no such thing as overbought or oversold.
More practically, how to trade it? I’d like to see a retrace to one of the levels I have drawn in, and then wait for the price to bounce strongly off that level for me to go long. Will it retrace? Maybe, maybe not. Will it bounce? Maybe, maybe not. But those are my criteria to go long because the medium-term trend is bullish, the retrace gives me somewhere to put my stop-loss, and the bounce shows that there are still more buyers in the short-term for me to play off.
The Aussie is another pair that looks strong to me. I’d like to see a channel form on the 4-hour – giving the pair a chance to consolidate before another push higher. Of course, should price start to challenge any of the swing lows it’s made on the way up, my bullish bias would disappear with the same speed.