Good morning, traders. As mentioned was likely, during the live streams last week, we are finally seeing the pop that has been building. But we absolutely must see follow through. We still need to see a 4H or higher TF close above the December 9th swing high at $3633.20. That general area also happens to be the 4H pivot, so coming up through the bottom and closing above it would be bullish. A close below the December 15th swing low at $3179.54 would suggest further downward momentum. At this time, anything else is part of the "wait and see" game as price has merely hit previous diagonal support as resistance so far. Consolidation in or around this area should have price targeting $3500-$3550, I believe. This would have price printing a descending channel with four alternating touches, meaning we would normally expect a pullback and then push through the channel resistance.
Price has, thus far, held its ground rather than dumping immediately as has usually been the case with these sudden strong surges upward during this corrective cycle. That doesn't guarantee that price will continue up, only that we are seeing a bit of a difference in this current movement which makes it more possible than usual that it will. Larger sell orders have been placed multiple times this morning but then pulled as price failed to fall significantly after the pump. In fact, demand support appears to be building underneath price. 1D RSI has pushed through the resistance at 32-33 that I've been mentioning, so a close above that could be bullish for the pair. We need to see price printing a higher high than December 12th's $3490 or run the risk of hidden bearish divergence printing on RSI.
If you have been following me, then you know there are multiple bullish patterns that have been printing. These may now be on the verge of playing out. The most important at this time, it would seem, is the 1D red descending wedge. A successful close above the wedge's resistance should bring into play a target of $1150 above the point price breached that resistance. If that happens within the next few days, we would be looking at price making a move into the low-to-mid $4000s at the very least. However, today's move pulled price out of a slightly smaller descending red wedge whose support is the same but with resistance denoted by the descending red dotted line. This pattern would give us a target of $4145/50 as shown by the orange price range tool. The 1D pivot sits at $4660, so a close above that should prove to be significantly bullish for the pair.
Don't forget, we have discussed the possibility of a trip down to the $2500/$2600 area as well, but the further down you continue to look, the greater the likelihood we won't make it that far. What this means for traders is increased risk. The question is, would the increase in profit justify the exponential increase in risk? Only you can decide that for yourself. A good rule of thumb is that if your reward doesn't increase 2x for every 1x of risk your trade increases, then it isn't worth it. The idea is that you should be looking for exponential compensation in order to take on increased risk.
My EUR/USD long continues to produce profit, but the pair may be on the verge of a pullback. 1H DXY is bouncing off oversold as it is being rejected at the ascending wedge's support-turned-resistance. Based on that pattern, DXY should be targeting 96.16, but ultimately I'm looking for it to potentially reach 94.10 or so. That would mean more upside for other majors against the USD, or downside for the USD against the other majors (depending on how you would prefer to look at it). As always, this is a generalization and specific country USD pairs will be dependent upon the other country's economic situation as well. The Fed is set to speak on Wednesday and there is growing pressure for dovish comments, but not too dovish, as an attempt to provide support for the stock market's drop. Speaking of which, the DJIA gapped down on the open this morning but should find support around $23675. If it does not find support by that level, then the stock market is worse off than most believe. A bounce from there could see the DJIA target $24,300 before falling further. Traders should watch for 1D bullish divergence on the MACD's histogram to give a bit of a bump.
Every day, we have a choice to act positively or negatively, so if you get a chance, do something decent for someone today which could be as simple as sharing a nice word with them. You just might change their day, or even their life.
Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.
Price has, thus far, held its ground rather than dumping immediately as has usually been the case with these sudden strong surges upward during this corrective cycle. That doesn't guarantee that price will continue up, only that we are seeing a bit of a difference in this current movement which makes it more possible than usual that it will. Larger sell orders have been placed multiple times this morning but then pulled as price failed to fall significantly after the pump. In fact, demand support appears to be building underneath price. 1D RSI has pushed through the resistance at 32-33 that I've been mentioning, so a close above that could be bullish for the pair. We need to see price printing a higher high than December 12th's $3490 or run the risk of hidden bearish divergence printing on RSI.
If you have been following me, then you know there are multiple bullish patterns that have been printing. These may now be on the verge of playing out. The most important at this time, it would seem, is the 1D red descending wedge. A successful close above the wedge's resistance should bring into play a target of $1150 above the point price breached that resistance. If that happens within the next few days, we would be looking at price making a move into the low-to-mid $4000s at the very least. However, today's move pulled price out of a slightly smaller descending red wedge whose support is the same but with resistance denoted by the descending red dotted line. This pattern would give us a target of $4145/50 as shown by the orange price range tool. The 1D pivot sits at $4660, so a close above that should prove to be significantly bullish for the pair.
Don't forget, we have discussed the possibility of a trip down to the $2500/$2600 area as well, but the further down you continue to look, the greater the likelihood we won't make it that far. What this means for traders is increased risk. The question is, would the increase in profit justify the exponential increase in risk? Only you can decide that for yourself. A good rule of thumb is that if your reward doesn't increase 2x for every 1x of risk your trade increases, then it isn't worth it. The idea is that you should be looking for exponential compensation in order to take on increased risk.
My EUR/USD long continues to produce profit, but the pair may be on the verge of a pullback. 1H DXY is bouncing off oversold as it is being rejected at the ascending wedge's support-turned-resistance. Based on that pattern, DXY should be targeting 96.16, but ultimately I'm looking for it to potentially reach 94.10 or so. That would mean more upside for other majors against the USD, or downside for the USD against the other majors (depending on how you would prefer to look at it). As always, this is a generalization and specific country USD pairs will be dependent upon the other country's economic situation as well. The Fed is set to speak on Wednesday and there is growing pressure for dovish comments, but not too dovish, as an attempt to provide support for the stock market's drop. Speaking of which, the DJIA gapped down on the open this morning but should find support around $23675. If it does not find support by that level, then the stock market is worse off than most believe. A bounce from there could see the DJIA target $24,300 before falling further. Traders should watch for 1D bullish divergence on the MACD's histogram to give a bit of a bump.
Every day, we have a choice to act positively or negatively, so if you get a chance, do something decent for someone today which could be as simple as sharing a nice word with them. You just might change their day, or even their life.
Remember, you can always click on the "share" button in the lower right hand of the screen, under the chart, and then click on "Make it mine" from the popup menu in order to get a live version of the chart that you can explore on your own.