As price action makes its way back up towards previous structure highs, we’ll reach what I like to call a “decision point” in the market. I call it that because it’s at this point where our “IF/THEN” thought process comes in today play in our decision of whether to go long or short.
Because we have yet to break structure, I won’t touch on the long option, but the short option is playing this current move as a 2618 trade. We have already entered the killzone starting at 1.1120’s and at this point I would be dialing down to your lower timeframes and looking for an entry reason.
IF this 2618 does complete and rollover, it would also be the “C” leg of a potential bullish bat pattern. You guys know how I feel about the “aggressive C” trade (BAD! BAD! BAD!) but this would be one that actually makes sense, only because you have a valid reason to enter.
I’m feeling horrible today as I’ve caught a cold from somewhere, but with A LOT on my trading radar (Syndicate members, take a look at the tradefloor this morning) I don’t want to miss what could be a day ripe with opportunity.
(If you’re unfamiliar with the 2618 trade, the free training is on our website under the “Learn to Trade” tab)
If not for :)) in the end,that comment would really be stupid:)
RobinOphion
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Great, where can I get this timemachine? :D
OT: Great call Akil, was thinking the same on this pair
Akil_Stokes
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Nice, it'll be interesting to see how it reacts at this current resistance level
OneFreeLook
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Then 1.15 on it's way into 1.20
Captain_Walker
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Asking a pretty silly question here perhaps and making some observations - but I'll take my chances. Be gentle.
Looking at the inverse correlation with the strength of the USDOLLAR, there seems to be nothing magical about the EURO or even the EURUSD pair. The EURUSD is largely at the mercy of the USDollar. And the DAX or example is nearly as well inversely correlated to the DAX (GER30). So - speculations on the EURUSD (and the DAX) rests heavily on the USDOLLAR? If one is betting which ever direction on EURUSD (or the DAX) one might as well do same on the USDOLLAR?
Akil_Stokes
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I wouldn't call that a silly question, after all how can you receive an answer if you don't ask a question. We had this conversation in my trading room the other day but to keep things short I would say that correlations do exist (in general) but they often tend to change over time depending on various economic conditions. So although it's great for making observations I personally would never place a trade on one pair or index because of something that is happening on another. There are just too many variables.
Captain_Walker
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Ok.. glad to know it's not a silly question. Hache below says (below) that the Euro can create strenght/weakness independently of the USD action. I can't doubt that at all.
I've found out that that the USDOLLAR index is a composite index comparing the USD against several other currencies (I'm mindful that there is no way to say how strong USD is unless compared to another currency or currencies). That in itself makes USDOLLAR index a robust measure of the strength of the USD. However USDOLLAR is weighted by a geometric mean to 57.6% by the EURO itself (along with 5 other currencies). en.wikipedia.org/wiki/U.S._Dollar_Index and investopedia.com/terms/u/usdx.asp
If the denominator in the EURUSD is the USD strength, then when that denominator increases in size, the result of the EURUSD fraction, must be reduced. The converse is true for the numerator.
In a sense, the weighting of USDOLLAR index by the EURO itself, suggests that it is an inverse, 'mini EURUSD' i.e. USD v EURO (that 57.6% weighting). I imagine that explains the near mirror image of USDOLLAR to EURUSD? The weekly chart captioned in this post shows only one brief period lacking inverse correlation. [It's startling when you run a cursor along comparing the two instruments in one chart.]
Akil_Stokes
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I think what he was trying to say is to make sure that when you're looking at currency "pairs" you keep in mind that it's not only about the strength of any given pair, rather it's the strength of a given pair versus it's competitor.