Quote of the day: “If I have lost confidence in myself, I have the universe against me.” - Ralph Waldo Emerson
EURUSD – 1.4398 @06:55 GMT
Good morning. The euro continues to advance against the dollar after ECB raised interest rates by a quarter percentage point to 1.25 per cent, as expected. The dollar is weaker across the board and metals are trading at record highs while writing these lines. As you may recall from my last two articles (one, two) – I was, and still am, looking for more upside action after testing support/former resistance at 1.4250, which was tested yesterday before surging to $1.44. Looking at current charts, I draw the conclusion that next upside targets are 1.45 and 1.46, as both levels are forming a resistance range – best seen on the weekly charts last year in January. Anyway, since it is Friday already and I feel that current weekly range is quite exhausted, I’m closing my running positions and will look for more buying opportunities next week.
Trading strategy: standing aside
Support: 1.4350, 1.4250, 1.4130/50, 1.4100, 1.4070 and 1.4000/30
Resistance: 1.4400, 1.4500 and 1.4600
Market sentiment: long term – mixed, medium term – bullish, short term – bullish, intraday – bullish
- EURUSD 4hrs chart 4-8-2011
- EURUSD weekly chart 4-8-2011
Have a great day!
Hi Liviu :-)
Yeah, given the subject of the resistance, I find myself subjective of the same thinking that resistance from the weekly trendline is about to be hit actually now. As you see in the weekly charts of eurusd pair, there is a forming of Bearish Gartley pattern in the offing, while I am at it I am not sure how effective is the pattern going to be and yet fundamentally more so with the interest differential gains at its side, EURO is certain to rise more highs in the coming weeks, but then I tend to be questioned by the forming of this so called bearish pattern that there is going to be a reversal sometime(a big one though??) but not a timed nor a clear entry for the reversal is visible or could be that is this pattern just going to be vanished in due time. I certainly think that EURO is now actually at the cross roads of deciding a new cycle. I do agree that now 1.428 and 1.42(actually) are strong form of supports and strong bullishness has been just defined but then what could be the exit of the bullish trend and what could be the reversal is not clear. Any thoughts on this?
BTW, I really like your thought process of buying highs and selling at even higher with confidence.. one of the first of the pages that I open for intraday information is innerfx.com :-)
interesting observations. I don't scan the markets for Gartley patterns so I totally missed it.
Anyway, some of my trading rules say that 1. price is more important than a trendline and 2. trendlines are meant to be broken and 3. odds are that a trend once established, it's likely to continue.
It's just a matter of timing and choosing a good entry when a trendline is breached.
While the EURUSD trades in a narrow range just below the multi-month high, I say there is no reason to call a reversal. Sure, there are patterns, lines etc. to suggest we're at the top and the thing is due to correct/decline, but such lines/patterns exist at (almost) any market level, on both sides, suggesting either a trend continuation or a reversal. Sometimes picking one of several patterns, some opposed to others, in order to make a trading decision is like picking a lottery ticket. :)
I think we'll see 1.5 before correcting. Just a wild guess worth two cents
Hi Liviu :-)
thanks for the reply. I think a point noted about the trend line. 1.5 — yes, even the bollingerbands std deviation ends at 1.51 and that seems good enough to close the range but what are the odds for the reversal other than technical reasons? Is there any good USD strength building up anywhere? what is your near term(like 2-3 months) outlook on USD strength? (other than long term that it is going to fail miserably anyways and the downfall of the king is imminent).
Cheers!
Hi Liviu :-)
Today was really a bad day, I hope not for everyone though. I was not really sure about the situation though…
Anyways, what do yyou think of eurusd from now after the huge bear day candle in months now, is it the start of the new trend altogether? I do not want to sell nor look at the sell oppurtunities when and if the market is actually gaining the momentum to upward trend again ;-) but neverthless this has been a real tricky day for me and I must admit I have learned my lessons .. will put it forward here sometime later.
Hi Nik
Such large candles are common in strong trends when several conditions favor a counter trend move (such as Greek situation, S&P downgrading US outlook). There's also lower volume in pre Easter Holiday trading. After several failed attempts to break over 1.45 last week and current decline, I think there's more room for a correction but calling it a major reversal it's not what I'd like to do, because EURUSD is not "only" about EURO's weakness but more about dollar's weakness and, even if we compare two bad apples, there's no doubt that the dollar is in a worse shape.
I think it will hold above 1.400 in near-term and personally will be glad to go long again if uptrend resumes, eventually… although at this stage I'm short against EUR in some crosses.
Good luck
Okay. Are you of the opinion that eur will still be able breach 1.5 target despite the current negative waves around euro?
pretty much yes, up to 1.5-1.52 within a few months.
Anyway, it's a pair I wouldn't put a bet on for more than a few days.