Hello Traders. Hope everyone is staying warm. Snow and zero degree temperatures expected in Virginia.
Many traders use many different indicators. There are so many its impossible to tell which ones are useful. Simplicity is key.
The most important tool in a traders toolbox is the ability to deceiver the prevailing trend. Using higher high/ lower low analysis we can identify the difference between strong market moves and weaker ones.
This stems from the well known philosophy that in order for markets to continue moving in the correct direction they need to confirm momentum shift before making large moves.
-Resistance is considered overhead levels that price struggles to break AND CLOSE above.
-Support is considered under price levels that price struggles to break AND CLOSE below.
Notice how I mention, AND CLOSE. It is 100% required that price CLOSES above the support or resistance level to declare it broken on whatever time frame chart being traded.
After the perfect head and shoulders pattern unfolded many traders continued to short EURUSD without much success (Took a stop loss myself) One must recognize the downward momentum was triggered by the bearish head and shoulders pattern (see attached post, traded perfectly.) In actuality the trend is still bullish. At the end of the head and shoulders move, trend reversed only briefly. Price was unable to break the low before moving higher.
At (1) the first top was made. After making new highs, we always expect a retest of old resistance confirming support. (2) Price came back and tested old resistance, confirming support in a reckless fashion. This wiped all long traders out and assured direction for short traders who were burned before. Once everyone was mixed up, the trend prevailed to the upside.
Now we find ourselves at (3). New highs have been confirmed so price is expected to retest old resistance to confirm as support around the 1.19500ish level. At this level I will be watching diligently for signs of rejection and ready to take entry on a single close of any rejection formations. If we confirm price action, targets are estimated around 1.2300.
IF you found this useful or thoughtful Likes/Comments/Follows are much appreciated! TElphee – Self-made Technical Analyst. 5-year market enthusiast with experience in Forex, Futures and Cryptocurrencies. Disclaimer: Oanda data shown. This is NOT investment advice.
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Correction in the last paragragh. Price is expected to rest old support* to confirm resistance*. Hence euro dollar has made new highs and comes back to test old level.
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Solid signs of rejection of the high on Fridays open. Waiting for a break and retest of 1.2000 to open short term shorts.
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Price has broken the low to start on wave 3-4. Even testing old support to confirm it is now resistance.
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The comments above represent price action moving lower on a shortterm perspective as anticipated. Back to the bigger picture, the original chart, price has moved lower to strong support zones. 1.19000 is likely to be tested tomorrow. 4 hour chart will be my guide to short term trend. Daily chart will need to show reversal signal before I enter. Patience friends. Market is heavy. Mid term Eurusd -Long Short term Eurusd -Short
Well, your prediction has been pretty spot on so far, I am in it short right now, hopefully it drops to 1.21 area for a nice 100 pips!
UnknownUnicorn981629
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@mjuhazie, Thank you for your kind comment. The euro is my favorite of all markets. I think we are in wave five of the cycle, which is earlier than anticipated, shown by my wave line drawing. Actually looking at the 5 wave structure, the first wave was horizontal, the second wave was more vertical and the fifth wave almost straight up. Looks pretty text book. Who knows where the top will be. We have hit my estimate of 1.23, so I am neutral at the moment but 1.24 is a very real possibility. Wave 5 is the largest wave so I'm showing caution. Good luck!
kavkav77
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Hi, what do you think is it time to buy eurusd or we want to wait a little bit for another pullback? Thanks for your reports.
UnknownUnicorn981629
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@kavkav77, Good question. The only two scenarios I will be considering entry at this point is either a break and retest of the high around 1.20890ish or another good pullback that breaks the low around 1.19158 and then setups another buy signal around the 1.19 level.
mjuhazie
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I think the jobs report tomorrow will decide if price breaks through now or does what you show here. A poor jobs report and the dollar will tank and the EUR will soar to a new high, strong jobs and a one way ticket to 1.1950.
UnknownUnicorn981629
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@mjuhazie, that’s a sound fundamental analysis. We shall see what the future holds. Seems as tho the charts predict the data most of the time. I’d love to see 1.1950, and a solid rejection ;)
UnknownUnicorn981629
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@mjuhazie, Looks like your right so far. A very weak Jobs report has EUR testing highs. Forex Factory puts the number at 148k actual with estimates at 190k. New highs are very likey.
Price has not broken through from the announcement. Almost looks like a good short but I'm not gonna step in front of the train. Waiting patiently for a pullback.