EURUSD Holding Pattern Until Breakout
The setup here is in a neutral zone until the market shows its hand. As you can see there are a few failed attempts to go higher above the key resistance level. The long candlewicks are a sign the market could be turning over. However there is key support on the 6 Day Rolling Pivot Range (RPR) and this gives us pause on a short position.
In other words we will need further confirmation as to whether we will commit long or short. This will be determined by a few factors.
1. Does the market close above the resistance or below the support as shown on the Daily chart
2. The Pivot Ranges adjust daily so keep a close watch on these. Has the Daily Pivot Range (blue/magenta dots) moved above the candlestick or below the candlestick is the key element to watch. This will determine the near term bias for long or short.
3. The same rule applies for the longer term 6 Day RPR (green/yellow dots). Each day watch for the adjusted level to determine the bias or shift in bias of the market to bullish or bearish.
The Daily Pivot Moving Averages (DPMA) are a lagging indicator but do provide a good indication of bias, particularly when a crossover occurs recently as has the 30 day crossing the 50 day DPMA (yellow crossing white lines). In this case the bias is bullish.
Finally, you will notice the pivot stack of the Weekly and Monthly Pivot Ranges which show us the longer term bias is to the upside. These indicators show us the price has support at these longer term ranges but could be tested if the price closes below support.
Stay tuned as we await new trading days to determine our outlook for a possible long term trading position for the EURUSD.
Indicator Legend
Daily Pivot Range (blue/magenta dots) | Weekly Pivot Range (orange/red dots) | Monthly Pivot Range (green/black dots)
6 Day RPR (lime/yellow dots)
Daily Pivot Moving Averages (DPMA): red=14 day, yellow=30 day, white=50 day
In other words we will need further confirmation as to whether we will commit long or short. This will be determined by a few factors.
1. Does the market close above the resistance or below the support as shown on the Daily chart
2. The Pivot Ranges adjust daily so keep a close watch on these. Has the Daily Pivot Range (blue/magenta dots) moved above the candlestick or below the candlestick is the key element to watch. This will determine the near term bias for long or short.
3. The same rule applies for the longer term 6 Day RPR (green/yellow dots). Each day watch for the adjusted level to determine the bias or shift in bias of the market to bullish or bearish.
The Daily Pivot Moving Averages (DPMA) are a lagging indicator but do provide a good indication of bias, particularly when a crossover occurs recently as has the 30 day crossing the 50 day DPMA (yellow crossing white lines). In this case the bias is bullish.
Finally, you will notice the pivot stack of the Weekly and Monthly Pivot Ranges which show us the longer term bias is to the upside. These indicators show us the price has support at these longer term ranges but could be tested if the price closes below support.
Stay tuned as we await new trading days to determine our outlook for a possible long term trading position for the EURUSD.
Indicator Legend
Daily Pivot Range (blue/magenta dots) | Weekly Pivot Range (orange/red dots) | Monthly Pivot Range (green/black dots)
6 Day RPR (lime/yellow dots)
Daily Pivot Moving Averages (DPMA): red=14 day, yellow=30 day, white=50 day
Comment:
The market did provide us the retracement to 1.17391 - so at this time you'd want to place a reasonable stop loss around 1.1674 just below today's DPR low (Daily Pivot Range). Once the new session starts we can take a look at revising the stop loss, which could trail up a bit, depending at what price we finish up the current session.
Comment:
With the new session we see the DPR is above the current price so the near term bias has shifted to the downside. However take note of the Weekly Pivot Range and you will see the downside could be limited with this nearby support. At the very least you may want to bring the stop loss to a couple pips under the WPR low.
Comment:
**Reminder to see the Legend in the first part of this study for all the names of the indicators.** You can also download them by signing up here: virtuestrading.com/pricing/
Comment:
Here you can see the new session's DPR and the 30 Day DPMA crossover of the 50 Day DPMA. I would anticipate a correction to the WPR again before resuming the uptrend. The long wicks are signalling a potential stalling. Maintain discipline by maintaining your stops. Bring up the stop loss to just under the WPR low.
Trade closed: stop reached:
At one point this trade had about 85 pips profit. Ideally you do not want to turn a very healthy winning situation into a losing trade. The best thing to do in this scenario would have been to place the stop loss at breakeven, and although I wanted to do this I was preoccupied with other trades.
With the stop loss that we moved up to the WPR low would have approximately a 20 pip loss. A small loss but unnecessary!
In order to capture the outsized gains of 150 - 300 pips it's necessary to give plenty of room on these stops to let the market do what it needs to in order to run the trend.
With the stop loss that we moved up to the WPR low would have approximately a 20 pip loss. A small loss but unnecessary!
In order to capture the outsized gains of 150 - 300 pips it's necessary to give plenty of room on these stops to let the market do what it needs to in order to run the trend.
At this point, if you did not already enter based on the breakout level of around 1.1730 I would suggest not chasing the market and instead place a limit order on a retracement back to around 1.17520. This is about 50% retracement from the highs to the key resistance level...view the hourly chart for a better look at this.