Pip Diddy's Chart Analysis

Here’s another daily chart where I’ve applied the Fibonnaci retracement levels to its most recent swing high and most recent swing low. Notice how the pair found resistance nicely on its 76% Fib line. If this resistance holds, I see the pair falling down and finding support on its 61% Fib line. If the resistance breaks, then it’ll try and break the 1.2300 level.

Check out the Fibonacci retracement levels on this chart. Notice how the pair got smacked upside its head when it reached its 76% Fib line. That is its immediate resistance. Currently, this pair is testing support at its 62% Fib line. The candle hasn’t closed yet so it hasn’t officially broken support yet. If it does, look for to test its next support at the 50% Fib line and then its purple 200 SMA.

Notice how the three moving averages are moving ever so closely to each other. Watch out. That’s a possible sign of a big move coming.

This pair is fighting its pink 50 EMA right now. It wants to go up but the pink 50 EMA and blue 100 SMA won’t let it. Looking at this chart, the pair could head either way. If the 50 EMA and 100 SMA hold as resistance, I look for a fall back to its double beezy (bottom) around the 115.50 area. If the resistance fails, I look for a rise back up to its triple teezy (top) at 119.00.

Here’s another daily chart using Andrew’s Pitchfork. Look at the area where the falling green trend line has intersected with one of the tines. I’ve marked it with a red circle.

Notice how the pair has found support at that area. Let’s see if that support can hold. If it does hold and can close above the purple 200 SMA, I’m looking for the pair to rise up to its red tine. If support fails, then I look for the pair to fall to the green tine.

There is minor support at 1.7414 from its previous low. But I don’t think this level will put up as much as a fight as the 1.7400 level though. I’m looking at the current candle, if it can trade lower than the last candle, I’m going to go short. Here’s my trade idea.

I will sell this pair at 1.7420. My stop loss will be placed above the high of the last candle at 1.7455. My profit target will be 1.7360 which was the pair’s previous resistance before it broke out of its past consolation. Once the pair hits 1.7385 will move my stop to breakeven. I will also move my stop to breakeven if the pair closes below 1.7400 but hasn’t necessarily reached 1.7385.

This mama jama dropped like a rock. It looks the pair has consolidated from its big move and trading sideways between 1.7370 and 1.7325. I think it has more room to fall. 1.7310 is solid support for now. If that level doesn’t hold, it’s next support is 1.7285, and bigger support is 1.7250. If you scroll your chart back in time a little, you’ll see that the former was previous resistance and the latter was previous low. If it can break out of its resistance on the upside, I see it rising back up to 1.7400.

Trade Update:
My short trade was triggered at 1.7420. Then it hit my profit target at 1.7360. My prize was a gnarly 60 pips.

I currently see this pair as range-bound between 1.7624 and 1.7230. I’ve applied Fib retracement levels on this sideways channel. Notice how the different Fib lines act as effect support and resistance levels. The pair was able to break and close above its 76% Fib line…again. Notice what happened last time. A bunch of spinning tops/doji formed and back down it went. Will this happen again???

This pair has managed to close below its purple 200 SMA. If it continues to fall, it will face significant support around there area containing the pink 50 EMA, blue 100 SMA, and orange ascending trendline. Keep an eye on this area this week. If the pair is able to break and close below this, I’m betting the farm and shorting.

The oscillators are giving off bearish signals. The MACD shows a bearish crossover. Stochastics also shows a bearish crossover inside the overbought region as well as beginning to fall back below 80.

Here’s an hourly chart that’s also showing bearish divergence. The price is making higher highs (HH) while both oscillators are making lower highs (LH). Because all three chart timeframes I’ve looked at are making bearish divergences, it looks like this rally is puttering and I’m looking for this pair to drop. Here’s a super aggressive trade. Short now at 1.2380. Place your stop at 1.2405 which is above the most recent high. Target 1.2315 or 1.2300 depending on your greed. Use a 25 pip trailing stop.

Since I won’t be trading tomorrow because it will be like watching grass grow, let’s review my trade recommendation from yesterday.

Here’s what I wrote:

“Here’s an hourly chart that’s also showing bearish divergence. The price is making higher highs (HH) while both oscillators are making lower highs (LH). Because all three chart timeframes I’ve looked at are making bearish divergences, it looks like this rally is puttering and I’m looking for this pair to drop. Here’s a super aggressive trade. Short now at 1.2380. Place your stop at 1.2405 which is above the most recent high. Target 1.2315 or 1.2300 depending on your greed. Use a 25 pip trailing stop.”

Here’s what happened:

The trade triggered and I was blessed by the forex gods with a cool 80 pips.

This chart is still showing bearish divergence. I’m looking to sell this pair if it breaks its trendline and its horizontal support from its previous high.

Here’s my trade:

I’m going to short at 1.2390. My stop will be 1.2440 which is right above its most recent high. I have two profit targets. My first target is 1.2340, where I will remove half my position and move my stop to breakeven. My second target will be 1.2300.

A nice triangle is forming here. As the price gets tighter and tighter, we could see a big break out of the triangle. Just in time for the ECB monetary policy decision tomorrow.

Short 1.2580. Stop 1.2610. Profit 1.2530.
Long 1.2710. Stop 1.2680. Profit 1.2760.

The 1.2690 level looks to be acting as good support for this pair on this chart. The ascending blue dashed trendline is also providing nice support. If this pair can manage to break through this support, I’m going to sell this pair. Here’s my trade idea:

Sell at 1.2670. Place your stop at 1.2730. Target 1.2610. Exit half of your position. Move your stop to breakeven. Then target 1.2550

Bearish divergence seems to be everywhere! Support is its red trendline for now. If the pair can manage to break below support, I see it falling at least to its previous low of 1.2660. If the candle does close below the trendline, I will sell this pair. My stop will be placed above the high of the candle prior to the breakout candle. My profit target will be 1.2660.

hi pipdady, sorry I don't mean to stop you. but all these days I saw you short and short eur. but the price has been going up and up. the tryangle thing seemed lack of its power at this time.

Japan’s Ministry of Finance issue warnings today that they might be “intervene in the yen”. This is Ministry of Finance talk for “buy a gazillion dollars to purposely depreciate their yen”. In the past, the Japanese has started sweating bullets at the 110.00 level, so I’m not surprised intervention comments are coming out. And don’t forget about their nemesis…China.

China has continued to purposely keep their currency weak especially against the dollar. This allows their export to remain cheap which foreign countries and Wal-Mart shoppers alike love. So the yen is appreciating versus the dollar but the Chinese yuan is not? Americans love a bargain. They will stop buying imports from Japan if they can get it cheaper from China. This ain’t going to fly with Japan. That’s why they’re thinking of intervening. They don’t want this to happen. In the news, Japanese corporations are also complaining about the recent rapid appreciation of the yen. So keep an eye out on the 110.00 level. It could be a very tough floor to break.

Which leads me back to technical analysis (that still works?). There is positive or bullish divergence on this chart. Price has made a lower low while the oscillator has made a higher low. This usually signifies that the sellers are exhausted. Maybe 110.00 will hold after all. For now.

EUR/USD
This pair is still showing bearish divergence. This seemed like a perfect setup today with the pair expected to weaken due to strong expected U.S. retail sales. Apparently that didn’t work out as the market dumped more of their dollars because they felt the retail numbers sucked. Will this pair ever go down? Count the recent green candles versus the red candles. Looks like a European bull stampede to me.

USD/CHF

Let me first point out that is a daily chart of the swissy and not the euro. I like to look at the swissy pair to confirm what I see on the euro pair. The EUR/USD and USD/CHF are 99% correlated which means when EUR/USD goes up, USD/CHF goes down. Check it out for yourself. Amazing huh? Like clockwork. Since the euro chart was displaying negative or bearish divergence, I always check to see if the swissy chart is showing the same thing. Lo an behold, on this chart, there is also bearish divergence. The price has been making lower lows while the oscillator is actually making higher lows. So I definitely believe the dollar is due for some kind of relief rally. The million dollar is when is it going to happen? Will it happen tomorrow? It might.

I believe the trade deficit has to come out with som exceptionally positive numbers though. The markets seem to be only focused on the dollar negative right now, and don’t give a hoover dam about anything dollar positive. Even if the trade deficit comes out inline or just a tad above expectations, I have no doubt that EUR/USD will hit 1.30 and USD/CHF will drop to 1.20. The trade deficit has to be $61 billion or smaller for these divergences to work like they should.

When big news come out, such as the trade deficit report, technical analysis usually gets throw out the window. If you stare hard enough at both of the charts above, both pairs have been diverging for quite some time now, and yet the dollar keeps being dumped. This is also why you must pay attention to market sentiment. Right now, the overall sentiment is “the dollar sucks and to get rid of your stash if you’re still holding some”. Market sentiment can become strong that it causes your technical analysis to work like crap.

Check out how the pair was able to close below its pink 50 EMA which had been acting as support. The red descending trendline is its immediate resistance. If resistance can hold, I see a good trade setup. I will sell this pair if this current candle closes back below the red trendline. My stop will be placed 5 pips above its 50 EMA (marked "X"). There is a chance that this pair will attempt to touch its 50 EMA again. My profit target will be the blue 100 EMA (marked "$"). Keep in mind the value of the moving averages are constantly changing so remember to adjust your stop loss and profit limit orders accordingly.

Here's something pretty interesting. I’ve drawn thick black horizontal lines to mark the round “00” numbers such as 109.00, 110.00, etc. I’ve also drawn thin gray dashed lines to mark the “50” numbers such as 109.50, 110.50, etc. Notice that when the pair breaks and closes above or below a round “00” numbers, it reaches the “50” number. It doesn’t happen every single time, but it happens very frequently! So what exactly am I trying to say? What I’m trying to say is if this pair can break and close above 113.00, there’s a very good chance one can buy and take profit at 113.50. Take a bearish view, if this pair can break and close below 112.00, one can sell and take profit 111.50. Based on past price action, both trades have a probability of winning.

Interesting observation pipdiddy thanks for sharing.