Hello Traders,
Rise and shine, it is time to excel in a new trading day!
And the Winners Edge is here as always to provide you Forex advice and guidance.
Yesterday’s article focused on the Ferrari of the currencies: the GBPJPY. The Ferrari nick name stems from the fact that the pair makes volatile moves up and down…
Today we focus on the EURUSD as a continuation and follow-up of the earlier post in Monday’s article “this week’s EURUSD movements”.
EURUSD
Range bound: the EURUSD consolidated in a narrow sideways range for almost 2 trading days. The currency pair was not able to choose either direction and went range bound instead.
Finally in the late New York session the EURUSD made up its mind and decided to complete a retracement to upside, as mentioned in Monday’s article.
Divergence leads to revival: divergence on a 4 hour chart is not something to take lightly and always gives cause of concern. In this case it also gave steam for a bullish revival.
The EURUSD has made it all the way up to the 618 Fibonacci retracement of the last impulse.
Is it ready for a turn down? Or will the pair in fact continue with its march north?
Price action: price action on the 4 hour and day chart has been behaving quite bullish so far. The move up has not encountered any candle stick formation which would give me cause to think that the EURUSD will stop here.
Of course nothing is certain, but looking at price action, I do see a higher likelihood of a higher retrace up to the 786 or 886 Fib or all the way up to the top at 1.3518.
The 500 Fib: that top is also more or less equal to the 500 Fib of the entire move down (1.3506), which could act as a resistance level as well.
Day chart: The day chart does warn us though that the downside correction might be over as we speak. The currency could have completed an ABC down and is now ready for the next move up? So where does the upside bullishness start?
Bullishness: for me the EURUSD becomes bullish when we close above the previous high of 1.3518. That is when this currency pair is showing us higher highs and higher lows on a significant time frame. Until then the likelihood of some more downside is still present.
Conclusion: my Forex trading plan and strategy is the following: I am looking to short the EURUSD right around that 786 Fib at 1.3475 and/or at the 5oo Fib at 1.35 with a stop above the top (1.3518). Can I lose on that trade? Of course I can. No doubt about it. But to me it seems like a great reward to risk trade. Until we break that top this up move can be nothing more than a retrace and that is what I trading for. What happens if price crashes through my stop loss? I lost 50 or 25 pips and I am looking for trades on the EURUSD to the upside.
That concludes my Forex trading advice for the moment.
What are your views on this currency pair?
Don’t forget to let us know what you would like to see analyzed in tomorrow’s article!
As always, Good Trading!
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