Ok, I got kicked off my 3474 short on BE on Friday because of one last stupid spike...Whatever, shit happens. Nasty weather outside, so I put together this simple weekend analysis especially for noobs here, pros are well aware of these simple facts.
Next week will probably be one of the most crucial weeks in last few months for E/U...Even for scalpers like me, this is a place where you should seriously consider opening a medium-long term position. We are heading towards a few super-dooper important levels (as for Monday):
1) 1.3525 - this is a level where PA meets a TL connecting two major lows, Jun 2010 and Oct 2011, it acted as support before being broken south, now it could do the same service as a powerful resistance
2) 1.3550 - this is a level where PA meets the top of its rising channel and itīs also a quite important SR level itself...Remember - price NEVER forgets.
3) 1.3626 - for me, this is a BIG one. This is better to be seen on a W1 chart, this is a level of utmost importance. Itīs not only 61.8% fib retracement of the Oct 2011 - Jan 2012 move, but also and more importantly, top of the major descending channel PA have been respecting literally to the pip since Aug 2011.
How to play the game then? I am playing with three potencial scenarios in my mind...Iīll try to sort them as I evaluate their probability, but who am I to predict PA in the first place
1) Bounce back from any of these levels (probably 3550) and retracement (3320, 3200...) before further continuation north
2) Range consolidation (perhaps a bit southwards) in this area for a few days to get rid of those overbought levels (bullish flag?) and further continuation north
3) Bounce and continuation of major move south to 1.20 level. This would require some major deterioration of situation in Europe, remember that in the long run, this is all about interest rates. And with FED rates fixed till 2014 and need of cheaper dollar for continuous recuperation of US Economy, numbers are pretty clear here.
We have a year of major elections and elections always mean lots of promises and almost always positive reaction (crowds are dumb) from markets. Stock indices can easily continue their rally. Europe frankly didnīt solve shit with greek bail out and they are still on a road to disaster but they managed (at least it seems so) to delay it and to calm markets for the moment. Germans hate expensive Euro but currently, as Euro is bound very tightly to stock indices, there is nothing they could do really (LTRO might help a bit though). ECB with Draghi at the helm is doing a brilliant job in covering the traces of in how utterly bad shape are european finances as a whole (and much more in some particular countries, such as Portugal, Ireland and Spain). It will return as boomerang to them one day but that day is far away and noone in the City gives a damn about distant future and thatīs what counts. Noone gives a shit about how large the greek debt will be in 2020 or if Greeks need another bail out till 2020...
Technically, I see MAs rising on Daily for the first time after 10 months (!), BUT weekly MAs are still fairly bearish. Furthermore, there is clearly a bearish divergence forming on W1...
However, as stated above, the levels we are approaching to will tell us a lot about whatīs coming. I still favour major bounce from these levels south, so I will be looking for any signs of weakeness in the trend to short this bitch and will probably long her as soon as (if) the retracement start to lose steam. G20 meeting this weekend might give us some short term direction.
Btw, IF we got stuck in some tight consolidation this week, next week would actually (check the screenie) bring all three points above together (TL, channel and res) at 3550. In the dreamworld, it would be all sorted out there and offered a low risk high reward "sell your farm" opportunity you donīt get every day, no matter which direction it takes.
Stay sharp and good luck.
my EUR/USD Analysis for 27.02.2012 with Long/Medium/Short term outlook
Updated with Dollar Index overview
Monthly Chart - BULLISH
1) We have a primary uptrend from 01.02.2002 wich was recently confirmed at 01.01.2012 (3rd trendline touch and reverse).
2) We also have a hammer candle in a good spot, at the bottom of the range from 1.4607 - 1.2662 and it was confirmed by a higher monthly close,
this means buy.
3) The current correction (1.2635 - 1.3486) is a intermediary trend (30+ days) and is impulsive for the 2002 primary uptrend and corrective for the latest primary downtrend (1.6038 - 1.4548) trend (4+ years), however considering the current ranging environment, we see more of a sideways movement than a trending one on lower TFs.We can see on the weekly chart that the price is nearing the middle of the range as part of a retracement (currently 50.0 Fib of 1.4246 - 1.2698). The corrected wave is also against the 2002 uptrend and in the direction of the latest primary downtrend.So a prefered target for monthly chart would be the 1.3753 resistance, wich is also before the 23.6 Fibo of 1.4246 - 1.2698. Entry points can be established on lower timeframes.
The 38.2 Fibo Arc also seems to provide good support.
Weekly Chart - BULLISH
We can go long till 1.3790-1.3800. Thats before 23.6 Fibo and before the 4+ yr downtrend will be reached. A good entry point would be made available if on the lower TFs we get a pullback lower of the current up movement (for better R:R), if not we can use the 1.3351 SL and 1.3505 entry point. MACD is also going up, and price is looking to reach any of the MAs on the chart.Another argument to go LONG is to look on the DAILY TF, we have a confirmed Inverted H&S formation with potential to reach Fibo 38.2 or higher.If the H&S will retest the neckline (around 1.3380 - 1.3400) and get rejected there we get a better place to long this.I think there is a good probability of price to re-test the neckline on DAILY maybe because its nearing that descending trendline.Or it can simply break it.
Daily Chart - BULLISH
Price has broken 1.3375 resistance and consolidated above it (1.3462).
Daily H & S is confirmed.
Regarding the retracement, there is still a long way to go up.
Dollar Index Daily H&S confirmed although it still might climb up to test the neckline - so short dollar, up euro.
Good target is 1.3700, while a more conservative one (better chances of being reached) is 1.364x/5, sitting just above 38.2 Fibo.
H4 Chart - NEUTRAL
We have a uptrend channel but price is nearing the upper slope and is showing signs of weakness/pullback with the RSI being at 77 and a spinning top / doji candle wich needs further confirmation.Maybe a correction of wave 1.2974 - 1.3486 is starting, remains to be seen.That would coincide with a re-test of the Daily/H4 H&S neckline on the Dollar Index that can happen soon.
In that case , after we get signs that the bears are in power we go against the trend, shorting (low-volume recommended) at 1.3445 SL 1.3502 TP 1.3364, some way above the 1.3327 pivot .
Remember, we go against the general trend if we short so we choose conservative / small targets and later get in LONG in better places.
In case the price doesnt reverse and consolidates further above 1.3450, we will go LONG using the signals on the higher TFs (entry 1.3505) but with TP of 1.3590 and SL 1.3445.I chose that TP because I have a H4 resistance at 1.3600.
H1 Chart - NEUTRAL
It may be a long or it may be a short.If its short (considering a correction), we use the numbers on the chart, if not we wait for higher TF signals (long at 1.3505).
I got burned shorting EUR/USD till i decided to trade with the trend, then I was ok.Remember, E/U is a Bullish Market atm, fundamentals dont matter that much, everything is in price anyway, concentrate on higher TFs for safer trading, use low volume to let the trades run properly if you must, wait for pullbacks to go long again and dont look for opportunities to short if you are more than a intraday trader.
Remember that we have Daily and H4 H&S on the Dollar Index.
A re-test of the neckline there could sugest a small pullback/correction for the euro, but that should be all of it.Good Luck!
Dollar Index H1 27.02.2011
Think, I need to add you to my "buddy list"...
i'll be grateful to know your ideas.
we have people saying bull, we have people saying bear. Everyone wants the market to go their direction so they can profit .
This will be a very interesting week
I am most impressed and made me to calm down for the highlighted fact, rest of things I don't understand. even the most experienced trader can't escape from bad trap. therefore the more the mistakes are shared by experienced traders, we noob will get motivated, confident, even after many silly mistakes we do commit.
This week, looking for a bit of pull back (1.3380 would be nice)
Then: maybe 1.36x
But at the same time I'm keeping in mind: big drop is coming, sooner or later!
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