The bullish US Dollar trend is losing steam against the other majors – especially against the Japanese Yen, followed by the Euro and then the Pound. Today’s post will analyze the majors with trend lines, Fibonacci levels, price action, and candle stick formations as the main tools.
Momentum: so far the momentum has been strongly bearish but the candle sticks are not clearly as bearish as when the momentum started.
Candle stick: weekly chart is showing a bullish weekly pinbar. The wick at the bottom is a majority of the candle (85%), which indicates that bulls regained control during last week’s trading.
Fibonacci: price is at a 50% Fibonacci retracement level (+/-1.60) of the last bullish swing high and swing low, which could be a potential bouncing spot.
Trend lines: 2 purple trend lines connect the tops and bottoms and show a potential falling wedge chart pattern, which is a typical pattern when a reversal takes place.
With the above mentioned observations in mind, is there any trade setup? The signals are mixed so there is not a clear cut favorite, but in general I would split the chart into these bullish and bearish zones & bounces:
Momentum: the momentum has been strongly bearish.
Candle stick: bullish candle sticks are indicating potential struggle for the bearish trend.
Fibonacci: when placing a Fibonacci retracement tool on the last bearish swing, price could continue in its bearish trend from the 38.2 Fib level.
Trend lines: the rising wedge trend lines have seen a massive break but bigger wedge lines are still intact. The next major support is the bottom of the wedge.
With the above mentioned observations in mind, is there any trade setup? Yes, a short from the 38.2 Fibonacci retracement level down towards the bottom of the weekly wedge. The 38.2 Fibonacci level is near the 1.30 psychological round figure so a stop loss could go above 1.30 or above the 50 Fibonacci level.
Momentum: the up momentum has given way to a down momentum, which could be a correction of the bullish swing high and swing low (August 8 – October 1).
Candle stick: bullish recovery after bearish momentum.
Fibonacci: daily candle stick wicks at the 50% Fibonacci retracement level.
Trend lines: there are breaks to both sides but the most recent break was bullish and price is still above the outer trend line (magenta).
With the above mentioned observations in mind, is there any trade setup? With the bounce at the 50 Fibonacci retracement level, I am keener on longs but only after the next resistance level (blue) breaks. Stop loss could be below the 50 Fib. The first target is the top and the 2nd target is the -27.2 Fibonacci level.
What zones and bounces do you see on the majors? Which pair is the best setup for your trading this week? You are able to share your views down below.
Thanks for reading and Happy Trading this week!
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