This piece of analysis was requested by one of my followers, although I don’t actively trade this pair – I do like to analyse it. Here’s what I see, although I wont go over the monthly time-frame as its a bit of a mess. Price is just moving sideways and consolidating.
So last week we saw a huge shooting star rejecting the monthly resistance level of 1.0800. The rejection also pierced our favored Fibonacci reversal zone (highlighted in blue). Naturally, in my mind I would be looking for Short positions in the week ahead .
It’s also worth noting that the weekly E.M.As are still crossed to the downside.
Here we can see the rejection of 1.0800 a lot more clearly. It acted as both support and resistance 4 times since April (daily).
It’s also obvious that the cause of the huge bear weekly shooting star is Friday’s monster marubozu, which fell almost 150 pips in a single day. We are at the top of the current range, with obvious bearish signs – from a daily perspective Short positions again would be the only thing I’d be looking for.
The final confirmation would be a daily M.A cross, but waiting for that before opening a position would mean to leave too many pips on the table. Another thing that isn’t in the image above is the fact that the latest daily high also rejects a daily trend-line… Just another confluence.
So… let’s look at a decent looking opportunity to sell if you wish to jump in with this pair – this is what I think:
We’re seeing the first pullback after Friday’s commanding fall, we’ve retraced into a our slower E.M.A, our 38.2 Fib level and P.A has formed one of my favored reversal formations. We’re also about to see a M.A crossover on the H1 time-frame. A short order could have been opened upon the close of the latest 4HR candle.
As for targets, the 1.27% Fib D extension falls a few pips short of my already marked intra-day support level which is also a psychological round number (figures that end is 00s and 50s). The more confluences the better, these areas tend to act like magnets, ‘pulling’ the price towards them.
For a further-afield target, if we manage break and maintain below 1.0550, the most obvious for me is is the monthly support of 1.0400.
Let me know what your thoughts on this pair are, I’d be interested in hearing them!