* Technical Highlights:
1- The pair reversed the that is represented in the XABCD pattern in purple that was signing a trend reversal to the upside from the overall represented in the weekly chart. It was signing a trend reversal, because the pair did show a higher low and traded above the 200 DMA.
2- This sign on the XABCD pattern returned to be a false breakout, and prices continued pushing down, continuing the . Trading below the 200 Daily moving average, giving us a bias on this pair. Also the black as well as the 200 DMA acted as a very good resistance point on this pair.
3- Prices fell to a critical point to reach the support of the C leg at 0.94 in December, 2014. Prices kept on trading water after failing to break below that critical level. Prices then shoot up to breach the 200 DMA adding to more confusion for traders. The could not hold as a support and prices again failed to stay above the 200 daily moving average, sending prices to re-test the C leg of the which was rejected several times.
4- At final, prices broke that area of support "0.94" after 9 months of consolidation, suggesting more bias on this pair. Now the 200 DMA has left the role of being the mere , and the 100 DMA is taking control of playing as a , suggesting further bias.
5- The pair fell to touch the 0.915 level or the A Leg of the , before breaking this level prices re-tested the 100 DMA and are poised to fall again.
6- If prices break the A leg pattern support, we could see a steep downtrend heading towards the next round level of 0.9000 and then 0.8500.
How to trade?
I already took a short position on this pair @ 0.976 with 50% of my position is filled and the other 50% will be filled after I see a breakout and a re-test of the 0.9158 support. I usually divide my position into two, the first position is to test the market and usually is the riskier one, while the second position for confirmation. As they say never test the depth of water using your two feet.
I set stop losses at 3% - 5% higher than my filled price.
I don't set take profits, as I let the position ride with the trend, while only trailing my stop loss until its touched and i get out of the position. But my target for this pair is 0.85 by fall 2016.