Hot Dragon Alert: £ Strength and ¥ Weakness Fueling the Fire!
The Dragon has been absolutely on fire these past few days, fueled by the pound's strength and the yen's weakness. Unfortunately, my trading idea for this week turned out to be a total bust, and I got stopped out pretty darn quickly :( It happens, though. Ups and downs are part of the game.
But hey, let's take a step back and reanalyze this pair. We need to zoom in on the monthly charts because volatility is off the charts right now. We want to figure out where the big players are likely setting their sights.
So, the bulls' short-term target seems to be that MONTHLY SELL/SUPPLY zone between 184 and 188. However, if you look at the lower timeframes, we're in seriously overbought territory. That's why I wouldn't be surprised if we see a sell-off early next week.
What also caught my eye? That bold red line I marked on the chart. It represents the 0.786 Fibonacci retracement level from the 2015-2016 leg down. Price has actually hit that level today, which could spark some selling or profit-taking action. I'm thinking the target could be around 176.
Honestly, with all the overbought conditions we're seeing across the lower timeframes and at this 0.786 level, taking a short position early next week could be a smart move. With the BOE super Thursday next week we could see some selling leading into this event which will allow buyers to reposition lower.
Here's what I think might go down: expect a sell-off early next week, with the price dropping towards 176. That would give the buyers a chance to regroup and get ready for one final upward push into that sweet spot between 184 and 188.
If you ask me, I reckon a short sell at this level could be worth a shot. What I will be doing is waiting to see where the price closes this week before jumping in on Monday. I'd be targeting around 176 maybe a little higher though will be closing before Thursday
Now, for you buyers out there, I'd hold off on buying at the current levels. Better to wait for a pullback towards 176 before considering re-entry as given the level we are at now and the extremely overbought would be better to wait.
I will also be looking for selling opportunities as price goes up towards and inside the 184-188 SELL/SUPPLY level.
That's how I am seeing it
But hey, let's take a step back and reanalyze this pair. We need to zoom in on the monthly charts because volatility is off the charts right now. We want to figure out where the big players are likely setting their sights.
So, the bulls' short-term target seems to be that MONTHLY SELL/SUPPLY zone between 184 and 188. However, if you look at the lower timeframes, we're in seriously overbought territory. That's why I wouldn't be surprised if we see a sell-off early next week.
What also caught my eye? That bold red line I marked on the chart. It represents the 0.786 Fibonacci retracement level from the 2015-2016 leg down. Price has actually hit that level today, which could spark some selling or profit-taking action. I'm thinking the target could be around 176.
Honestly, with all the overbought conditions we're seeing across the lower timeframes and at this 0.786 level, taking a short position early next week could be a smart move. With the BOE super Thursday next week we could see some selling leading into this event which will allow buyers to reposition lower.
Here's what I think might go down: expect a sell-off early next week, with the price dropping towards 176. That would give the buyers a chance to regroup and get ready for one final upward push into that sweet spot between 184 and 188.
If you ask me, I reckon a short sell at this level could be worth a shot. What I will be doing is waiting to see where the price closes this week before jumping in on Monday. I'd be targeting around 176 maybe a little higher though will be closing before Thursday
Now, for you buyers out there, I'd hold off on buying at the current levels. Better to wait for a pullback towards 176 before considering re-entry as given the level we are at now and the extremely overbought would be better to wait.
I will also be looking for selling opportunities as price goes up towards and inside the 184-188 SELL/SUPPLY level.
That's how I am seeing it
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