JasperForex

EURUSD: It’s all about the US economic data

FX:EURUSD   Euro Fx/U.S. Dollar
Four out of five days the price for the Fiber advanced last week, for a total of 250 pips, printing a higher high in a string of consecutive higher highs and higher lows since it came off its low over a month ago. Ever since the FED went data dependent, there is a lot of volatility in this pair around the release of US data items. The bearish sentiment on the dollar of the last couple of weeks continued last week and we saw high impact data points miss their expectation like retail sales on Wednesday, ppi on Thursday and the preliminary UoM consumer sentiment on Friday. These misses caused the pair to rally (they don’t call it the anti-dollar index for nothing!) and it will be interesting to see what the rest of May brings in terms of US data.

The dollar is poised for more bearish sentiment the coming week and the price for the Fiber could advance again if US economic data continues to come in below expectations. In their last statement, the FED explained the bad data from the first quarter by pointing to transitory factors such as weather conditions. If however this continues throughout May (especially for inflation and employment numbers), they would have to acknowledge its more than transitory. Should the FED change their tone, we will see heavy selling of the Greenback. I still see it as the strongest currency fundamentally, but its current direction depends on the data being released. Signs that the Eurozone economy is recovering could strengthen the euro             in spite of the ECB QE programme and its biggest risk remains the Greek debt situation.

On the technical side, price is trading inside the potential reversal zone (PRZ) of a bearish Bat pattern on the daily. It seemed to have reversed already two weeks ago (and some may have jumped the gun on this), but the zone had not been properly tested so price came back for a real test last week. It’s also testing the upper trend line of a bullish parallel channel , which intersects this reversal zone. We have an area of resistance just above the PRZ, charted as Resistance Zone I, with the top level at 1.153. Even if PA would exceed the reversal zone, penetrate this resistance zone and reverse here, the Bat pattern would still be valid as it’s only invalidated when price pops above the X point residing at 1.153.

There is clear regular bearish RSI divergence developing, indicating underlying weakness and possible trend direction change from uptrend to downtrend. And finally there is a long-term bearish trend line cutting through the resistance zone , which could also provide a reason for reversal. In total there are five technical reasons why the Fiber is looking to reverse soon. Those looking to trade this potential reversal should put their stop loss above 1.153, as illustrated in the chart. I would look for a first profit target at the 382 retracement of the AD leg and the second target at the 618 retracement of the AD leg, giving a reward - risk of 4.2.

Should however price break Resistance Zone I, we could be in for a strong rally. This would present an opportunity to go long with stops below Resistance Zone I and I would be looking for a final target at 1.200 (with the first target being equal to the trade risk). I did not plot the stops and profit targets for this long trade, as the chart would become cluttered but the trade would give a reward - risk of 3.8. We would have a Crab pattern completing at 1.205, with the PRZ just above it. 30 pips above this zone is the 50% retracement of the decline that started May of last year and above that level we find Resistance Zone II with the top level at 1.236. This would present an opportunity to short the Fiber, with stops above Resistance Zone II, the first profit target just above Resistance Zone I and the second at the 618 retracement of the Crabs AD leg, giving a reward – risk of 2.9.
You don´t need to be a weatherman to know which way the wind blows - B. Dylan
I agree that we cloud still expect a short term top in this area with a view of usual retracement of the entire move of the low. Whilst Fundamentally we might still get the impression that USD is or should be stronger, based on possible EW counts I think in this instance the price has potentially changed direction before series of future data which might confirm the merits of trend reversal in the price.

I also think that the USD gained disproportionately to its merits based on fundamental as sentiments drove it to extreme so now it is vulnerable for disappointments even if it does not signal that USA has gone into recessions or for that matter Eurozone has come out of economic mess. Hence a case of sentiment driven move rather than entirely fundamental based.

Will follow price progression or otherwise with interest. In the meantime here is my chart for comparison.

Thanks for sharing your analysis.
EURUSD - SHORTING RETRACEMENT IN NEW BULLISH CYCLE
+1 Reply
Thanks for responding and for sharing your chart. Your projection of C at 1.104 aligns nicely with a potential Bat reversal (still valid as long as price does not exceed 1.53) where the first profit target lies at 1.104 as well. I also take into account the possibility of the Bat not reversing and would go long at the break of 1.53 for a strong bullish move. I see this Month as key in setting the USD direction for the coming months and if data continues to be bad I would watch carefully for a change in tone by the FED (which could trigger more dollar selling).
+1 Reply
DanV MOD JasperForex
You are welcome, always a pleasure to view your analysis.

I agree that next month or 2 will be critical in providing clues as to longer term directional move. For now my DXY chart suggest there the trend change is on the horizon. If correct this could be enormously important future directions of most USD currency pairs and USD denominated assets in varying degree. Hope you want mind me sharing my DXY chart with you here.
DXY - POSSIBLY AT REVERSAL ZONE
+1 Reply
Thats quite a projection! I don't tend to look that far ahead, but if your chart comes true it would be headed towards an all time low?
Reply
DanV MOD JasperForex
Yes, I appreciate your chart is for much shorter duration. However, the point I am making is possibly there is major change ahead and if it does hold then we could see new LOW in DXY, correct. We need confirmation to validate this and which in turn could change overall bias that is all. Most of use would not be able to stay full course even if we were right due to our account size and metal stamina to stick with it.

But nevertheless worth keeping an eye out for confirmation.
+1 Reply
snapshot

Eying that 4 H Channel and the mentioned RSI Divergence you also had in your Desctription.
Going for Simple Structure Trades these Times. Its all driven by news lately, not much to do with technicals on EUR/USD ... or combining it with luck :)

Thanks for your post buddy!
WabbitPowa!

+1 Reply
Fib.The.Gentleman PRO Fib.The.Gentleman
DAILY
snapshot
+1 Reply
JasperForex PRO Fib.The.Gentleman
Yes it might reject the upper channel line. The green areas are your profit zones? I don't see it reaching the second...
Reply
No its Support and Resistance :)
no Trade for Monday on EUR/USD atm
+1 Reply
JasperForex PRO Fib.The.Gentleman
Ok understood, have a great trading week and may the pips be with you!
Reply
prettymuch looking at the same scenario on a technical side

Eur/Usd Weekly Market outlook
+1 Reply
You are right, nice one. Lets hope we can both make some pips on this pair the coming weeks. I like these if... then... analyses with more than one scenario as we try to be one step ahead of the market. Thanks for responding.
Reply
It seems like the retrace has began, at what point do you think it can be confirmed?
+1 Reply
JasperForex PRO DevonMerancio
I would want to see at least a 4H candle close as a convincing reversal candle. I don't enter at open candles.
+2 Reply
qFish JasperForex
This will change your RR depending on how it closes right? Or do you enter on re-test?
+1 Reply
Correct, since i don't enter harmonics with limit orders but upon reversal candles, the reward - risk can change a bit (for the worse or for the better as patterns can reverse anywhere within the potential reverse zone).
Reply
qFish JasperForex
Awesome, thanks! Still a lot of time to enter after the 4H candle so you can even setup for an even better trade. Patience pays for a higher probability entry.
+1 Reply
Great analysis Jasper, as always. Good Luck :)
+1 Reply
JasperForex PRO moneymaking
Thank you for saying so, good luck to you as well.
Reply
The more I learn, the more I realize so many people don't really understand price progression.
+1 Reply
JasperForex PRO TradeVulture
I have no idea what "price progression" means, but it sounds very intelligent. Would you care to elaborate?
Reply
TradeVulture JasperForex
Would take a while to explain it clearly. Progression is how price moves up and down a price leg to test levels of support that have been either lost or gained.
You Don
Reply
Nice longer term view ... I've given my view on the shorter term here
EURUSD - what to expect ?
+1 Reply
JasperForex PRO Nico.Muselle
Thanks for sharing your chart! We both have a decision point at the same level (1.153) above which there is a clear opportunity to go long. Until then the Bat remains technically valid, agreed.
+1 Reply
Good to see we're on the same page here ... and I fuly agree that fundamentals, mainly US data will determine the price action for the time being ... so whether the bat remains valid of will be invalidated will not so much depend on EUR strenght. The issues around Greece are mostly factored in imho, otherwise we would not see the pair going up. Only a surprise action on that subject could influence price.
+1 Reply
TradeVulture JasperForex
The patterns you mention don't matter at all. You must understand that the patterns are just a byproduct of progression. Patterns form during accumulation or distribution. It's how liquidity is produced. Learn to look at the bigger time frames first, then work your way in. How can you understand progression of your leg, if you stay on the daily or smaller? This bat pattern or w/e was an accumulation pattern to setup a first touch pop. We had massive momo on the downside. They have to accumulate to slow it down, to retrace the move we just came from.
Reply
I appreciate your vision, however some people trade on a smaller time frame and look at what is happening to price on that level. I agree, you always have to keep in mind the larger time frame and the trend there. As for harmonic patterns, they have proven to be working with a higher % than their failure rate. They are a visual representation of market psychology and sentiment. Do they always work ? Of course not ... but then again there is no trading system that is 100% working because at the end of the day price action is the interpretation of each individual trader, small or big, of fundamentals (news, data) and sentiment.
+1 Reply
TradeVulture Nico.Muselle
Market psychology and news is a bunch of nonsense. News is always late. Everything you need is shown within the chart. Until you learn how to properly read a chart, you will continue to rely on things like patterns and news. Just seeing a pattern tells you nothing. You need to understand why the pattern is forming. Chart don't lie.
-2 Reply
Seems you have it all figured out .... congratulations ! All hail the TradeVulture ... Now if you don't mind, I will go on reading my charts :D
Reply
JasperForex PRO TradeVulture
This sounds like a typical "my system is better than your system" discussion of which I have seen so many on this site it makes me yawn. Good to hear you have confidence in your approach to the market, I will look into this price progression since I am always eager to learn something.
+1 Reply
Just one more thing ... there is not just one "correct" way to trade ... there are hundreds, thousands of ways to make money in the market. Fact is that you have to test it and if it is profitable you should consistently trade that strategy ... If yours works for you, excellent ! But treating other systems as "stupid" or "ignorant" ... no, that is one step to far for me :)
+2 Reply
TradeVulture Nico.Muselle
Stupid trading means, you refuse to learn. Ignorant trading means, you don't realize there is something better.
-2 Reply
If you know so much better, why don't you share your opinion on what EURUSD is going to do on the shorter time frame ? Or doesn't your system work for that ? :)
+1 Reply
Insight on EUR strength: It is all about European bonds at the moment. The fall of German bund prices and rise in bund yields has been matched by a rise in the euro - investors have been dumping bonds owing to pathetic yields. If this continues the euro could stay stronger for longer.

Looking at the longer-term picture we continue to see a broad consensus amongst analysts that at some stage the decline in the EURUSD will recommence. While not all are predicting parity in the exchange rate even the most optimistic forecasts are pricing in 1.04 once again. Barclays are more bearish though. “While we acknowledge upside risks, we continue to forecast EURUSD to reach 0.98 at the end of December 2015 and 0.95 at the end of March 2016 as the US recovery regains momentum,”

https://www.poundsterlinglive.com/eur/eurusd/2068-sell-euro-to-dollar-eurusd-45454
+1 Reply
JasperForex PRO SergiyKurbatov
Interesting read, thanks for sharing :-)
Reply
Such a beautiful chart!
+1 Reply
Thank you for saying so.
Reply
Great summary analysis of the market and key factors driving it. Really nice!
+1 Reply
Thanks Tim, I appreciate it.
Reply
UPDATE: TP1 hit. Price dropped a total of 360 pips since the Bats completion. Todays strong US core cpi reading weighed on the Fiber and gave it the final push towards this profit target.
snapshot
Reply
Eugene_Titov JasperForex
Bravo!
+1 Reply
JasperForex PRO Eugene_Titov
Thanks!
Reply
UPDATE: Price keeps dropping due to the regained dollar strength after the strong core cpi numbers last Friday as well as the latest uncertainties surrounding Greece. TP2 is in sight.
snapshot
+1 Reply
thx for sharing
EURUSD with big bearish FLAG?


snapshot


The resistance (last valid "2" / downtrend upper edge) was too strong!
The longterm downtrend is likely to gain more momentum.!
The Level to watch is still @ 1,087!
- Prices below 1,087 (last low) will generate a target on the downside @ 1,045. Under 1,045 we will see a falling-knife-situation an the bearish flag would be triggered! The worst case target of the flag is @ 0,95!
The bearish situatuion is Relaxing with Prices higher than 1,145.
The Zone between 1,085-1,145 is imo neutral - just good for scalping (buying the Support, selling the resistance or breakouttrading!


former analyisis:
Will eurusd break the resistance @ 1,1445?

If eurusd will break its resistance @ 1,1445 you can exspect a new upwave till 1,18, the 38,2 fibo-retracement (1,044-1,40). perhaps the next "2?"?
Prices below 1,087 (the last low) will generate a target on the downside @ 1,045. Under 1,045 we will see a falling-knife-situation
http://www.marihuana-aktien.de
Reply
Ideas Scripts Chart
United States
United Kingdom
India
España
France
Italia
Polska
Brasil
Россия
Türkiye
日本
한국
Home Stock Screener Forex Signal Finder Economic Calendar How It Works Chart Features House Rules Moderators For the WEB Widgets Stock Charting Library Priority Support Feature Request Blog & News FAQ Help & Wiki Twitter
Private Messages Chat Ideas Published Followers Following Priority Support Public Profile Profile Settings Account and Billing Sign Out