Has the EURUSD finally reached a turning point?
Friday’s big bearish candle may seem to suggest that we’ve reached a turning point, potentially printing a double-to up at 1.2500
Now I know it could be easily argued (and probably more correctly) that we’ve actually seen three touches up at 1.2500, i.e., a triple-top. However, I look at the first two touches as “one” just because of how close together they were. In other words, the touches I have marked with the “1” above looked more like consolidation and a potential breakout higher to me – and not two distinct tops.
Anyway, where to now? The real test isn’t 1.2500. Selling now is still bucking the trend I’m afraid. I think the real test will be a little lower, at the first trendline I’ve drawn in.
Could we sell below today/Friday’s candle, down to the trendline? Sure. But the reward/risk isn’t worth it for me, especially, and I’ve mentioned this, you would be bucking the greater trend.
Similar to EURUSD, a short now is still going against the prevailing trend. I suspect price is actually starting to form a large, downward sloping channel (blue lines) that will ultimately be broken, and see Cable up at new multi-year highs. But I’m getting ahead of myself, and long-term predictions are not useful to anyone.
Trade idea – aggressive short: Tomorrow, at or around the London open, sell below today’s or Friday’s low (whichever is lower). Stops above Friday’s high and target a 1.3820, for about 150 pips. If price fell significantly today, I would be much less inclined to short later on in the week.
Trade idea – more patient long: Look for a bounce on the supporting (grey) trendline, target the top of the channel and potentially hold a second position for the long-run.
Does the blue circled area that I have marked show a breakout, or did it catch a bunch of early buyers out only to slam them back down again? We’ll know soon enough.
If we see a big bullish bounce here, get ready for a long trade targeting the 2017 highs.
Remember when we looked at the EURUSD chart and I said that I see two touches and not three because the first one just looked like a lot of consolidation to me? Same thing here.
I see price hugging the 1.5760 level currently. Price rushes up to that level, and instead of falling away, it’s just sitting there, day after day. That tells me that It wants to go higher.
Trade idea: Wait for a close above 1.5760 (or above the recent highs) to go long, targeting 1.6100.
On Wednesday last week, price printed a spectacular pin-bar on the AUDJPY. The pin-bar has a lot going for it as a reversal signal, namely: It’s on a zone that saw price previously reverse and bounce higher, it’s wick fell loooowwww and then snapped back up hard as buyers stepped in, it closed in a strong manner and then did…nothing.
It’s the ‘nothing’ we’re seeing now that has me waiting patiently. What else does ‘nothing’ look like? Just like the EURAUD chart above, with price hugging resistance.
In other words, for a reversal signal to be “good”, price needs to actually start reversing from your level, smartly. We aren’t seeing that. I’ll give this one another day for the bulls to come out or I’ll be removing it from my watchlist.