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.