Long term analysis for EUR/USD.
I hope that I will be able to explain the depicted 'chaos' on
the chart in words for everyone to understand, if you have
any questions let me know.
Currently price is at 1.1655, this was a very significant
level for price to close yesterday as its just above the bearish
candle from 21.05.2018, hence, indicating that the 1.1550 to
1.1600 level is holding as support - at least for the medium
term.
On the chart I have illustrated a potential bearish H&S
pattern in red. The right shoulder falls just below the
trend line drawn from the left shoulder. The high of the
right shoulder is the high of this month at 1.1852, thus,
a very significant level as I will now explain in
scenario 1.
Scenario 1: Price reaches the 1.1852 level, however, it
gets rejected. Applying the measured move from 1.2556
to 1.1508 and using it to measure a target objective, we
reach the GAP formed in March, 2017 after the French
elections.
If price holds and reverses within the GAP zone,
we can measure the next target objective by applying the
measured move of the impulse leg which formed the
bearish H&S pattern, hence, by doing so we reach the
61.8% retracement at 1.2598 as well as the yearly R1, and
testing the 15 year intermediate support trend line
(black diagonal line) as support or resistance.
If the intermediate support trend line turns to resistance
than we will have to set our scopes lower and start
targeting 'parity' levels below.
By applying the measured move from 1.3994 to 1.0340 to
measure a target objective, we reach the 0.8817 level,
which, too, is significant because its the level where
price broke through resistance in 2002, and those levels
were never tested as support, instead price just sky
rocketed from there.
Scenario 2: Price is able to breach the 1.1852 level and is
able to reach the Fibonacci confluence zone consisting
of the 38.2% retracement level measured from 0.8563
to 1.6038, and the 78.6% retracement level measured
from 1.3994 to 1.0340. The projected measured move
from 1.1508 to 1.3260 is the measured move from 1.0340
to 1.2092.
After reaching the 1.3200 levels, price retraces to test
the previous intermediate support trend line for support
after the breakout, and if it holds, per an AB=CD pattern
price eventually reaches past the 1.4000 levels all the
way to the 1.4400 levels.
In summary, the key levels for the short term are the
1.1852 level, rejection there will send price to close the
GAP below. Break and close above and we can target
new highs for this year.
If price reverses to the upside from the GAP zone, we can
target the 1.2590/1.2600 levels, again. From there a rejection
could send this market well past parity below, or test
previous highs above in the 1.3000/1.3200 zone.
Keep an eye out for the levels as described and go from
there.
Happy trading
I hope that I will be able to explain the depicted 'chaos' on
the chart in words for everyone to understand, if you have
any questions let me know.
Currently price is at 1.1655, this was a very significant
level for price to close yesterday as its just above the bearish
candle from 21.05.2018, hence, indicating that the 1.1550 to
1.1600 level is holding as support - at least for the medium
term.
On the chart I have illustrated a potential bearish H&S
pattern in red. The right shoulder falls just below the
trend line drawn from the left shoulder. The high of the
right shoulder is the high of this month at 1.1852, thus,
a very significant level as I will now explain in
scenario 1.
Scenario 1: Price reaches the 1.1852 level, however, it
gets rejected. Applying the measured move from 1.2556
to 1.1508 and using it to measure a target objective, we
reach the GAP formed in March, 2017 after the French
elections.
If price holds and reverses within the GAP zone,
we can measure the next target objective by applying the
measured move of the impulse leg which formed the
bearish H&S pattern, hence, by doing so we reach the
61.8% retracement at 1.2598 as well as the yearly R1, and
testing the 15 year intermediate support trend line
(black diagonal line) as support or resistance.
If the intermediate support trend line turns to resistance
than we will have to set our scopes lower and start
targeting 'parity' levels below.
By applying the measured move from 1.3994 to 1.0340 to
measure a target objective, we reach the 0.8817 level,
which, too, is significant because its the level where
price broke through resistance in 2002, and those levels
were never tested as support, instead price just sky
rocketed from there.
Scenario 2: Price is able to breach the 1.1852 level and is
able to reach the Fibonacci confluence zone consisting
of the 38.2% retracement level measured from 0.8563
to 1.6038, and the 78.6% retracement level measured
from 1.3994 to 1.0340. The projected measured move
from 1.1508 to 1.3260 is the measured move from 1.0340
to 1.2092.
After reaching the 1.3200 levels, price retraces to test
the previous intermediate support trend line for support
after the breakout, and if it holds, per an AB=CD pattern
price eventually reaches past the 1.4000 levels all the
way to the 1.4400 levels.
In summary, the key levels for the short term are the
1.1852 level, rejection there will send price to close the
GAP below. Break and close above and we can target
new highs for this year.
If price reverses to the upside from the GAP zone, we can
target the 1.2590/1.2600 levels, again. From there a rejection
could send this market well past parity below, or test
previous highs above in the 1.3000/1.3200 zone.
Keep an eye out for the levels as described and go from
there.
Happy trading