Matt Simpson, CFTe, MSTA
CityIndex
A break below 85.73 confirms a Triple Top on W1, however there may be opportunities on D1 to trade the short side prior to reaching this level.
The advance form the 85.73 swing low (in August) has seen a firm rejection of 88.96 resistance. A Weekly close around current levels would confirm a Dark Cloud Cover reversal, or a higher (but bearish) close would present a Hanging Man Reversal below resistance, to suggest losses ahead on D1.
Also note that 88.86 high has failed to get near the May high, which saw very small wicks prior to a heavy sell-off, which itself was below the Mar '14 highs. There is clearly weakness up near these levels to suggest we have seen a major top.
There may be an opportunity to trade a short breakout within the suspected Triple Top. 87.60 is a pivotal S/R level which houses today’s high. If we close around current levels it will present a Shooting Star However if Europe and US till to open the potential for a downside break below this key level is apparent, which would suit either a sell-stop order if you are not around to monitor price. Alternatively we can wait for a break of the inner-trendline and set a sell-limit to catch any retracements towards the broken trendline, or the assumed 87.60 resistance level.
I favour the downside break because price action from the August low appears to be corrective (lots of overlaps on the swings) and the higher timeframes are also suggesting a longer-term topping pattern.
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