EURUSD: Finding a Pattern for Profits
Lots of times trading will reward you if you find patterns in historical price data and bet on it occurring again. It’s kind of like the whole “History repeats itself!” motto.
Of course, history doesn’t keep on repeating itself, especially in financial markets. But there is another motto to remember: “The trend is your friend!”
Here’s a trend for ya ...
The euro has been on a dramatic run versus the dollar. This chart only goes back to the end of 2006, but the trend has lasted longer than that.
But being at such lofty levels, the $1.60 area to be exact, you start to wonder when a trend is winding down. So far, despite some weakness lately, this one still looks to be intact.
And the recent price action is just repeating price action before it. The first sectioned-off box of weekly price data is characterized by four things:
1) A new high followed by ...
2) A sideways consolidation that ends with ...
3) A big, one-week washout leading up to …
4) A breakout to fresh new highs.
The only thing we’re missing today is number 4). What are you betting on?
Regards,
Black Swan Capital
