Since the previous blog post on this currency pair, we’ve seen both downward targets of 1.70350 and 1.69900 achieved. Below we’ll take a look at how price played out from the previous blogs analysis.
Looking at the 1 hour time frame above from the previous blog post, we can see that I was anticipating a move into the 61.8 as well as the descending trend line as the first point to short this pair from. When looking to execute a trade, always be on the lookout for candlestick confirmation in and around the regions you are looking to execute from, as I will demonstrate below on an updated chart.
Looking at the how price played out on the updated hourly time frame, we can see that price started reversing just short of the 61.8 as well as the descending trend line. What added confluence to this short position was the double top that was formed and once price broke out of the area of consolidation between 1.71800 and 1.71450, price went on to create lower lows and lower highs with both downward targets being met. This short position offered a 1:6 risk to reward, falling 230 pips from the area shown.
On the 4 hour chart above, with our lowest downward target highlighted to create a zone we can see how it has acted as support where price bounced off of and is now approaching the 78.6 fib level which lines up with previous support/resistance area. If this zone can hold as resistance expect further downside movement but if we have a break above and retest of the zone drawn, expect this pair to move higher.
Today the Eurozone released their revised GDP for Q3 which turned positive, posting a 12.5% growth but looking at the GDP on the year over year basis, their GDP is down 4.3%. This Thursday, the ECB will be discussing how their Recovery Fund will be implemented as well as the possibility of further quantitative easing in order to boost their economic recovery.
Remember to journal your analysis and trade setups in order to track your progress and to make the necessary adjustments to your trading plan. Subscribe to receive updates sent directly to your e-mail.
The US dollar has come under a lot of pressure in recent weeks and with oil trading above $45 for the first time since the oil market crashed in the beginning of the year, let us look at potential short positions on this pair.
Looking on the daily time frame, we can see that yesterdays candle closure was extremely bearish, engulfing the wicks that were created whilst it was consolidating as well as closing below the ascending trend line and with the current candle pushing higher, we could find opportunities to short this pair by looking at the lower time frames. A daily closure below the ascending trend line would signal further downside on this pair.
On the 4 hour chart above, we can see how price found support on the ascending trend line in line with previous support as well, shown by the highlighted region. The horizontal ray plotted at 1.30450 highlights a key support/resistance level which recently acted as a strong support level, could offer resistance. Looking at the fib tool drawn, we can see that the horizontal ray almost lines up perfectly with the 61.8 retracement level. If there is no candlestick confirmation around the 61.8, one would wait to see if the 78.6 can hold as resistance which lines up with the set of double bodies illustrated by the arrow tool.
On the hourly chart, price is making lower highs and lower lows and since bottoming out at 1.29900, we have been making discreet higher highs and higher lows. Looking at the highlighted region drawn from the double bodies directly to the left of current price, we can see how previous support has now acted as resistance. If price can break above this level and continue into our preferred fib levels, it would offer the opportunity to go short on this pair.
Remember to always wait for candlestick confirmation around the zones you are looking to execute from in order to optimize risk management. Subscribe to our blog to receive updates sent directly to your e-mail.
The president of the ECB, Christine Lagarde, stated at yesterday’s press conference that the economic activity in Europe has lost significant momentum in the fourth quarter with the surge in coronavirus cases adding to the already heightened level of uncertainty.
Beginning on the daily time frame, paying close attention to the latest candle closure, we can notice that we had a bearish engulfing with price finding support on the daily level that was illustrated in the previous post. Now that price found support, we can see the pull back that was expected. Price does look to be printing a double bottom, but one would have to wait for the daily candle closure for that to be confirmed. However, with very little changing from a fundamental perspective for the euro I still expect further downside on this pair.
Dropping down to the 4-hour time frame, one can see that price has been making lower highs and lower lows. We can see more clearly how well this pair reacted to the daily level that was plotted. We are now seeing the expected retracement with price moving towards the 61.8 fib level where we could potentially find resistance around the 3rd touch of the descending trend line. If there is no candlestick confirmation around the 61.8, we would look for a rejection off the 78.6 which would also line up with a retest of the ascending trend line. Downward targets are 1.70350 and then 1.69900.
Remember to always wait for candlestick confirmation around the areas you are looking to execute from in order add confluence to your trading. Subscribe to our blog to receive updates sent directly to your e-mail.
With the post Brexit deal still proving to be elusive as well as Europe experiencing their second wave of coronavirus, the euro has been experiencing a lot of downward pressure when compared to the Kiwi dollar.
Looking on the daily time frame, we can see how using the double bodies on this time frame helps identify key reversal points in the market where price has been melting off. Previous support has now been offering resistance as you can see by looking at the downward pointing arrows.
Dropping down to the 4-hour time frame, we can see that price has been trending to the downside. Looking at the fib tool, we can see that there was a reversal off the 61.8 with price currently sitting on previous support. If price closes below previous support, expect price to pull back and potentially retest the ascending trend line. The next downward target is 1.71000.
Looking at the 1-hour time frame for a potential short opportunity. Once price bottoms out, the fib can be placed as shown and one would have to wait for a retracement into one of our favorable fib levels with the retest of the ascending trend line adding confluence as well as the level 1.72150 shown by the orange horizontal ray which was previously a strong support level.
Later today, the Eurozone will be releasing their monthly as well as annual CPI data with ECB President Lagarde speaking on the current economic climate and the ongoing impact of the coronavirus which will provide more insight into expected performance of the euro. It has been noted that infections in the eurozone has been declining which is a positive but with businesses still operating under strict restrictions, a recovery is not expected until next year when most lockdowns are lifted.
Using technical along with fundamental analysis adds more confluence to your trading and allows for a better understanding of which way price will move. Subscribe to the blog to receive updates sent directly to your e-mail.
Europe is turning to mass testing to contain the pandemic that has forced nations into lockdowns which cannot be sustained. Over the course of the past weekend, Slovakia attempted to test its entire adult population and the surrounding nations are looking to follow suit.
On the 4-hour time frame, with the same fib placed as in the previous blog we can see that price has hit the first profit taking region at 1.74500 while continuing to create lower highs and lower lows. The next downward target to look out for would be 1.73700.
Dropping down to the 1-hour time frame, with the fib placed from the high of the latest bearish move, we can see that price has wicked into the 61.8 as well as coming a few pips short of the major key level of 1.76000. Candle closures below this level would signal a possible short position but a more conservative approach would be to wait for bearish candlestick confirmation. Looking at the highlighted region illustrated, we can see that this zone has been acting as a pivotal support and resistance area and candle closures below this level would offer more confluence for the downside move. The previous candle closed very bullish therefore if price does break above this zone, we can look for reversals around the 78.6 region. Looking at the first take profit region on the fib, we can see that it lines up almost perfectly with our second downward target.
There is PMI data coming out later today for the euro. It is expected that both PMI data points will be released below 50 which indicates contraction in the services and manufacturing sector. This would favor a downside move on this pair. A release above 50 would indicate growth in these sectors which would be a positive for the euro but with coronavirus the main downward risk at the moment, it would offer very little relief for the euro at the moment.
Remember to always use multiple time frames to get a better perspective of where price could potentially move to next. Using higher time frame analysis allows for more accurate stop loss and take profit placement. Subscribe to our blog to receive e-mail updates sent directly to you.
The eurozone economy grew rapidly in the third quarter posting a 12.7% growth in GDP over the last quarter but with coronavirus infections increasing and new restrictions being implemented, downside risk is likely to continue.
Looking at the daily chart above, we can see that this pair was trending to the upside creating higher highs and higher lows illustrated by the ascending trend line. On the 27th of October, price broke structure to the downside which can be seen more clearly by looking at the upper highlighted region drawn from the bottom of the previous higher low. If the current daily candle can close below 1.75730, shown by the lower highlighted region, I expect further downside but if price closes above this region, we could have a potential double bottom which would signal further upside before price moves lower.
Dropping down to the 4 hour time frame, we can see that by placing the fib from high to low, there was a reversal off of the 61.8% and looking at the horizontal ray at 1.6840, notice that previous support turned into resistance. Looking at the previous candle closure, we can see that price broke structure on the 4-hour as well closing below the daily level drawn as well as the double bodies directly to the left of current price. The current candle is indecisive, and should there be a pull back, it would offer the opportunity drop down to the lower time frames to look for potential short positions if there is bearish candlestick confirmation at one of the preferred fib levels. Downward targets are 1.74500 and 1.73700.
Since Germany and France, Europe’s two biggest economies, imposed new restrictions this week to contain the spread of the virus, the eurozone is now expected to shrink again this quarter. Due to the rising infection rate, consumers have begun to avoid eating out, traveling as well as in-person entertainment while businesses are becoming more cautious. It is understood that any contraction in the eurozone economy this quarter is unlikely to be as deep as the April drop because the manufacturing sector, the second biggest sector in the eurozone, has made a strong recovery.
Remember to use fundamental analysis in conjunction with technical analysis to provide strong directional bias when analyzing specific pairs. Subscribe to receive blog posts sent directly to your email.
With the weakening of the dollar that we have seen since the end of last week, there has been significant strength in this safe haven pair.
On the daily chart above, we can see that price was consolidating below the highlighted region, 0.91800, which was acting as resistance before breaking to the upside with price continuing to push higher until a reversal was seen at the 61.8 fib level. Paying close attention to the downward and upward arrows, we can see how the highlighted region has been offering resistance as well as support but once price broke below the region again, it continued to act as resistance as you can see by looking at the last downward arrow.
One the 4 hour chart above, we can see that one could have gained entry on this pair by looking at the break and retest of the ascending trend line which also lined up with the 61.8 fib level where price created a lower high and went on to create a lower low where the first take profit region has already been achieved. Looking at the highlighted region, we can see that price has been very reactive to the 0.90550 area where price has found support in the past. If we have a 4 hour closure above this level, I would await a pullback using the fib tool to find potential entries.
Later tonight, we have Speaker of the United States House of Representatives, Nancy Pelosi, announcing whether a deal has been reached with Democrats regarding a stimulus package to support American households and businesses. In terms of dollar news for the rest of the week, be on the look out for Initial Jobless claims as well as Manufacturing and Markit Composite PMI’s being released on Thursday and Friday, respectively.
Remember to always stick to your personal trading plan and use the correct risk management. Subscribe to our blog to receive updates sent directly to your e-mail.
Today, we will be going over the euro versus the Japanese yen. In the previous blog on this pair, we were looking at the psychological round number of 123.000 holding as support which was achieved. Price went on to create a higher high which saw a 160 pip move to the upside, coming a few pips short of the first take profit region.
On the 4-hour chart above, we can see that there was candle confirmation on the 61.8 with a morning star formation. At market open there was a gap to the downside but price went on to create a higher high, there was a pullback to the neck line of the inverse head and shoulder but price ultimately broke lower finding support just below the key level of 124.000.
On the 1-hour chart, looking at the upper highlighted region, we can see that this weeks high of 124.700 has been holding as resistance. We could wait for a break of structure above the shown highlighted region and look for candle stick confirmation on the retest of 124.700 shown by the arrows.
Also, on the 1-hour time frame, if there is a break of structure but 124.700 does not hold as support we could use the fib tool to gain entry at one of the preferred fib levels. A reversal off either of the fib levels would print a potential inverse head and shoulder pattern which would line up with a retest of the neckline of the higher time frame inverse head and shoulder pattern.
Remember to stick to your personal trading plan and to always use the correct risk management. Subscribe to receive updates sent directly to your e-mail.
In the previous blog on this pair, we were looking at a pullback to complete a potential inverse head and shoulder. Although this was not achieved, once we had the candle closure above the ascending parallel channel, price went on to climb 150 pips to the upside.
On the daily chart above, we had a bullish engulfing candle that confirmed the move to the upside. Once price broke out of the area of consolidation, we had an extended drive into the key level of 124.000 which lines up with previous resistance where price reversed from. Looking at the current daily candle, we can see that price has wicked into the psychological round number of 123.000 which also lines up previous support shown by the lower highlighted region.
On the 4-hour chart above, we can see how the lower highlighted region also acted as resistance while price was consolidating and has now potentially turned into support if this current candle can close above 123.000. If we have a candle closure on or above the middle-highlighted region, we could have a potential inverse head and shoulder along with the rejection of the 61.8 fib level. If price does break lower, we could find support around the 78.6 fib level as well as the ascending parallel channel.
Drop down to the lower time frames to look for entry opportunities and always remember to use the correct risk management. Subscribe to receive blog posts sent directly to your e-mail.
Today, we’ll be going over the Euro versus the New Zealand dollar with technical analysis starting on the daily time frame.
On the daily chart above, we can see that a new high was made on the 23rd of September when the price closed above the previous high of 1.77850. Looking at the fib tool plotted, we can see there was a double bottom on the deepest preferred level of retracement, the 78.6, proving that 1.75000 is a strong level of support where a higher low was formed.
Dropping down to the 4-hour chart, we can notice a falling wedge shown by the two trend lines drawn which are converging to one point which signals a potential bullish breakout.
Dropping down to the 1-hour chart, we can see price wicked into a previous level of support as well as the 61.8 fib level forming a hanging man. If this level holds as support, I’d expect further upside from here but if it does move below this level, the 78.6 fib level as well as a 3rd touch of the trend line would be the next place where price could potentially find support.
Remember to stick to your trading plan and always use the correct risk management. Subscribe to receive blog posts sent directly to your e-mail.