Nico.Muselle

EURUSD - it's all very logical really

FX:EURUSD   Euro Fx/U.S. Dollar
4680 55 53
Last week EURUSD             surprised me by going higher than expected causing me (and many other people) to get caught in losing short trades. The reason (for me) is that I was biased about where the price should be heading due to the QE             measures and the strong dollar. I was sure price was to head down ...

Looking back at the week, I notice now that this price action was very logic for the following reasons :

1. We completed a bullish bat patter so we can expect a retracement to the upside.
2. The classical retracement levels for a bat pattern are the 0.382 and the 0.618 fibonacci levels, which we had not reached yet.
3. There was also the 2618 trade (double top, break of neck line and 0.618 retracement) where we did not reach that same 0.618 Fibonacci retracement.

All of the above pointed in the direction that there was more to the upside on this pair, but as I was biased on looking for short opportunities I failed to see them. Luckily there is such a thing as the weekend where we reflect on the trades from the last week and now it seems all very clear to me.

Lesson learned : Trade what you see, not what you want to see !

Where are we now ?

1. The 0.618 retracement of the double top has been reached, the 2618 pattern is ready to be traded.
2. We are at a level that has served as resistance several times in the recent past.
3. We reached the 0.618 retracement of the bullish bat pattern as well, but did not reach the 0.786 (which could be an indicator for a potential butterfly pattern taking price higher)

What will it bring us ?

Personally I will not jump into the trade first thing Monday morning. I will watch price action closely to check if this level holds. Then there are 2 possibilities :

4. Price action breaks and closes above 1.09 => we can expect the big resistance zone to be tested again.
or
5. Price action tests the level again and fails to break it => we can now short and look for the 0.382 and 0.618 retracement. Even a test of the lower support level is possible (100% retracement)

Have you been caught in a short bias as well, has this pair tricked you too ? Or did you manage to catch the whole move up ? Your comments are always welcome below !
AhmedDeterminist
2 years ago
you are the best man thanks
+2 Reply
Nico.Muselle MOD AhmedDeterminist
2 years ago
Thanks a lot, watch out for the early price action on Monday mornings .... it's often ranging in those early hours of the week !
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mustard
2 years ago
According to my H4 chart, the 0.618 retracement was completed in the previous swing high to 1.08487?

Price then moved back down, hit support with a double bottom, a bounce back to complete an AB=CD pattern and a potential continuation to complete a bearish Gartley, although this is not shown in your chart.
+1 Reply
Nico.Muselle MOD mustard
2 years ago
True, price action spiked briefly through the 0.618 retracement but there was no break above it. I'm not saying the analysis of last week was wrong, only I did not read the signals that it would go further up as I was biased that it would go down ... :) I also saw that bearish gartley on the smaller timeframe but thought it would never complete ... silly isn't it ? :)
+1 Reply
mustard Nico.Muselle
2 years ago
You give some great analyses Nico, I always look forward to your postings.
+1 Reply
Nico.Muselle MOD mustard
2 years ago
Thanks a lot ! I really appreciate it and it feels good to be able to help others :)
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Mo6e
2 years ago
Nicely said. Yes, the past week I was caught in one of my shorts. Specially when I saw on Wednesday a engulfing pattern on the 4h chart. This set it played but it went back on Thursday and kicked me out. So Friday on the daily R1 I shorted again at 1.0885 on the 1h time-frame and I managed to get a 60 pip target for 2 hours and before the durable goods news I closed the deal because the price action didn't confirm my plan for the next target. However as u said the last week is a a history to reflect on. I had set a plan to short the whole week but markets had different moves. I will watch the action this week, as you already analysed I see things almost the same. But I see higher probability that the price will go further to the upside, so I will watch for long positions next week. Nice analysis, have a good trading week.
+2 Reply
Nico.Muselle MOD Mo6e
2 years ago
Thanks for your comment ... Glad to know I was not the only one that got caught in it ... Anyway, as long as we learn our lesson and refrain from being biased for a certain direction this history should not repeat. Try to make one less mistake every time and we'll end up being more profitable than we are now, that's the goal ... :)
As for the move at the beginning of next week, for me it can go both directions, if I look at the dollar index, this is likely to go up, which would support the EU going down, but I'll closely monitor price action on Monday morning to check what direction we will be heading instead of making my mind up now :)
+2 Reply
HiTech PRO
2 years ago
Agree...
snapshot
+1 Reply
Nico.Muselle MOD HiTech
2 years ago
Hey HiTech, thanks for your confirmation, seems like our analysis matches ... now let's hope price moves accordingly :)
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HiTech PRO Nico.Muselle
2 years ago
watch euraud, much more interesting at this point, I think when it will hit my target eurusd will start moving lower
snapshot
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Nico.Muselle MOD HiTech
2 years ago
I'm watching it closely as this is also one of the pairs in my portfolio, but I'm not too sure about this channel. A lot will depend on what Gov. Stevens of the RBA will say on Tuesday, if he speaks about delaying the rate cut again (which I deem probable), we might see the AUD go up further.
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HiTech PRO Nico.Muselle
2 years ago
Chats speak before the news.. imho, we just have to find a way to read it, but interestingly I am picking up longer term AUD weakness across the board.
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Nico.Muselle MOD HiTech
2 years ago
Longer term I agree that the RBA wants a weaker AUD, however they are not as swift in taking decisions and the much anticipated rate cut keeps getting postponed (based on better employment numbers for example). However, one thing is the message that is spread, the other thing is how the market will react to it. To what extent is what's being said (or expected) already calculated in the current price, that's the big question.
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HiTech PRO Nico.Muselle
2 years ago
True a big question, my personal feeling is that all the new information that is just presented as well as possible consequences already calculated in the price.
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HiTech PRO HiTech
2 years ago
all the spikes and big moves after - is a chaotic reaction of the masses that does not carry true impact
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Nico.Muselle MOD HiTech
2 years ago
You could be right about that ... big market players, smart money has already calculated these things in the price ... Would only be logic.
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HiTech PRO Nico.Muselle
2 years ago
this is the reason I am pure technical guy, don't carry about news too much, just follow that for the sake to calculate entry times
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Nico.Muselle MOD HiTech
2 years ago
If you trade on higher timeframes you should not care to much about the news, true .... If you trade lower timeframes however the news can have a higher impact on your trades. Important news can easily move a pair from 50 to 150 pips in a certain direction ... for the smart money this is peanuts, but for some people this can be a disaster ;)
+1 Reply
HiTech PRO Nico.Muselle
2 years ago
very very true Nico!
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airmac PRO
2 years ago
Nico great stuff thanks!
+1 Reply
Nico.Muselle MOD airmac
2 years ago
You are welcome buddy, as always ! :)
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hodoman
2 years ago
Very nice and detailed analysis, as always :)
I agree with the alternatives exposed and my analysis is pretty much inline with yours.
Potential medium-term harmonic pattern for EUR/USD


I was also caught with short orders and kept adding with each minor retracement :(. On the other hand, I took advantage of the final strong rejection at 1.09 and finally closed them all with some overall loss. Its all part of the game in the end and what matters is to play it safe and stay in the game. Cheers and have a pipfull week :)
+1 Reply
Nico.Muselle MOD hodoman
2 years ago
Hey, thanks for your comment. We've both really been mislead in the last week :)
As for your chart above, I doubt we'll complete the bearish butterfly as the support/resistance is very strong. I'm convinced that we'll stay below that level, but I will not make the same mistake by being biased ... I'm prepared for whatever happens... Bring it on ! :D
+1 Reply
moneymaking Nico.Muselle
2 years ago
Previous week was definitely a tough one. I kept on making profit and giving it back to the market. It was rough :(
+1 Reply
Nico.Muselle MOD moneymaking
2 years ago
Same here ... as long as we learn from our mistakes, things can only get better in the future :)
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moneymaking Nico.Muselle
2 years ago
Yup, that is for sure. Just keep following your trading plan. That's the most important thing to remember.
+1 Reply
Nico.Muselle MOD moneymaking
2 years ago
That indeed is key to a succesful trading career. Thumbs up !
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rellster
2 years ago
Love your charts dude! Ultimately I agree with your conclusion for the trade, but have you given any consideration to a continuation wedge (trading between the 50% and 38% retracement prior to breaking lower?
+1 Reply
Nico.Muselle MOD rellster
2 years ago
Thanks for your comment ! I did consider it, as normally this is what you'd be waiting for if you are looking for a trend continuation. However, we are still in a consolidation here between 1.04 and 1.10 and I currently see no reason that shows me we'll break out of that channel. Of course I will keep an eye on it and keep all options open. :)
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moneymaking
2 years ago
Hey Nico, I was doing the same things as you mentioned above. I started to become overconfident about the euro falling. I completely agree with you, we should only trade what we see and NOT what we want to see. When we become to sure that the market has to go in this direction, that's the point where we are likely to lose the most. Thank you for sharing your experience, It's good to know that some also faced the same problem :)
+1 Reply
Nico.Muselle MOD moneymaking
2 years ago
Whatever you do in Forex trading, you are never alone in making a mistake .... most people don't like to share it. I see it as an opportunity to share my mistakes so other people can learn from it or at least to comfort them with the fact that they are not alone in making those mistakes.
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may405
2 years ago
Everything is correct on Monday and the head down)))
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Nico.Muselle MOD may405
2 years ago
Let's hope so ... but no matter what happens, we should be prepared for both directions, that's what this post is all about :)
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may405 Nico.Muselle
2 years ago
ok.
Best regards.
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LAMBO77
2 years ago
Nico you have always given a well thought out discussion and strategy regarding all your trades.

Personally this move tricked me, I sold at the 618 retrace of the bearish bat and saw the opportunity to sell at the double bottom that formed around the $1.06740 level but held it.

In the weekend I placed my stops at exactly $1.0925 and I'm looking at taking profits at the $1.06640 levels, which is again at structure.

Thank you so much for your insights :) Blessings
+1 Reply
Nico.Muselle MOD LAMBO77
2 years ago
Hey Lambo77, glad it's working out for you ... I also think the pair will move down now, markets are open so let's go and make some pips ! :)
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murat.oztan.35
2 years ago
Hello. Can we say 1.09 will be a strong support when iy goes above 1.09 or 1.092 , towards 1.1 ? I have sell position. I am trying to understand if it comes back to 1.07 or below. needs helpp... :) thank you
+1 Reply
Nico.Muselle MOD murat.oztan.35
2 years ago
If price would go up, the most likely point of return is around 1.10, it can return earlier though, for example around 1.092 where there is previous structure which could act as resistance.
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RobertPapon
2 years ago
Masterly analysis. Very similar to my analysis. A bit of a different look but the same conclusions. I am glad that we have a similar view of the same currency pair :)
+1 Reply
Nico.Muselle MOD RobertPapon
2 years ago
Good job ... now let's hope that price follows our analysis :)
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RobertPapon Nico.Muselle
2 years ago
Thank you very much. Up Today evening I will try to do better analysis :) Even today 70 pips earned
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may405 RobertPapon
2 years ago
super!
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may405
2 years ago
That will be today and tomorrow???
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RobertPapon may405
2 years ago
target is 1,1034 i think we can get it tonight or 2moro. Next can then bounce down from the resistance 1,1034. Tommorow is FED so be careful
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RobertPapon may405
2 years ago
I explained that in my analysis for today
Analysis and forecasts for the EUR / USD pair on 27/04/15
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may405
2 years ago
1.1270?
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Nico.Muselle MOD may405
2 years ago
It all will depend on FOMC tomorrow whether we'll break 1.10. If we do, 1.15 is most probably the next step.
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RobertPapon Nico.Muselle
2 years ago
yes I agree with you I made a new analysis on tomorrow. FOMC will indicate the direction
snapshot
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LubosM may405
2 years ago
EURUSD 2 options
+1 Reply
Nico.Muselle MOD LubosM
2 years ago
Nice chart ... I'm not placing any trades on this pair though until after the FOMC ... I think that's the safest (and 3rd) option for now :)
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LubosM Nico.Muselle
2 years ago
yes u right :)
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aldo1008
2 years ago
Sorry. Your analysis completely blown out of the water. Looked impressive with all the lines wedges, fibos etc. Now trading at 1.219..no short taken yet my friend, and if you look at the the last weeks bias, it's higher highs and lower lows with a simple trend line in place (Also now an elliott wave in place on the third way up to my reckoning). Not rocket science is it? I believe if you firmly stick to chart analysis you will be burned. A good rule of thumb of me is a 50/50 approach. Heed the fundamentals, then look at the charts for a position. Soros doesn't do traditional chart analysis, and yet he's probably the most successful FX trader in the world, wonder why?
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Nico.Muselle MOD aldo1008
2 years ago
I did not place a short trade yet either ... ;) This chart was a prediction and the thing about predictions is that they can be wrong ... But ... if you look closely to the chart, you can see that there is also a green arrow up to the 1.10 zone ... I believe that one came true, no ? ;)
It's easy to provide comments in hindsight ... , but where are your charts ? ;)
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aldo1008
2 years ago
Meant to state higher lows..not lower lows..
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