Gonçalo Moreira, CMT
Independent Analyst
- EUR/USD keeps trending on the lower half of the channel which has been defining the pace of this down move;
- A consolidative tone has emerged once the pair found support at the 161.8% Fibo projection leaving the observer in doubt as to its true intention;
- The gut reaction at the first break below 1.07 was that the action is part of a flag correction unfolding, which would imply a trend continuation. But the time the price spent meandering has morphed into a possible “U†formation where 1.0870 on the North would be the end point of the U. Note this point will coincide with the channel resistance in about 24 hours;
- Standard MACD settings show an overextended level on monthly readings similar to those only seen in the year 2000. The weekly had plenty of time to recover to the neutral midline, so the down potential is huge in the mid-term horizon. The daily MACD is negative but not at extremes, and on the 4H seems like a new indicator low would create three successive higher lows divergent to the lower lows in price, a positive sign in the short-term.
- Long entries are likely is not coming into the book before we are sniffing around March's low or thereabout;
- As sellable points I see many of them, but sell-on-upticks just for the sake of it may be too risky. Therefore, selling the following acceleration levels are the only take for now: 1.0851, 1.0913, 1.0922 and 1.0939.
The trading methodology reported in this analysis is based on a non-directional approach. It is meant to capture the most amount of pips from the constant price oscillations, either up or down. Each trade has a take profit of 50 pips, a stop loss of 500 pips. The size of each trade is regular, but trades can be stacked around key support and resistance zones, increasing the overall position size around certain price zones. The system can perform either in trending or range bound markets, but it suffers when there is an extreme unidirectional price advance. Buy and sell positions are taken with two separate real accounts.
To learn more about the method, you can watch these special webinar series:
Exploring the Coast Line of Foreign Exchange Land - Part I
Exploring the Coast Line of Foreign Exchange Land - Part II
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