Hello Forex Traders!
EURUSD is at the talking spot: bounce or break time.
Will the EURUSD continue to higher grounds and surpass this year’s 2013 high at 1.3710 or will the resistance hold?
From a technical analysis point of view these facts are crystal clear:
1) EURUSD is at the bottom of the uptrend channel (blue)
2) EURUSD has divergence on 4 hour charts between tops
3) EURUSD ha divergence on daily charts between tops
4) EURUSD has placed a daily close above 88.6% Fibonacci retracement level
5) EURUSD has broken above the -0.272 target, and the -0.618 target should usually be next
6) Daily bearish engulfing twins
To cut a long story short:
EURUSD is in an overextended short-term uptrend which has approached long-term resistance. The best trades are either:
a) when the short-term trend turns bearish, or
b) when the short-term uptrend regains its momentum. For the latter to happen, the daily oscillator needs to go back to the zero line OR the 4 hour chart needs to have higher highs and higher lows above the 1.3650-1.3710 resistance zone
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EURGBP SUPER TRADE
More interestingly is the current spot of the EURGBP. Please review the following analysis to understand the enormous potential the EURGBP might have anytime soon:
1) This currency pair has made a 5 wave structure on the daily chart
2) In the meantime the currency could have completed a massive ABC structure
3) On the weekly chart this could be the beginning of wave 5, with a wave 1-2 on the daily chart mentioned as point 1/2
4) In that case wave 3 of wave 5 might be starting RIGHT NOW
Price is already confirming the start of the wave 3:
a) Price has had divergence to the downside, made a falling wedge, broke of the falling wedge
b) Price has broken out of the down trend line (purple)
c) Price is making 5 waves on a lower time frame (30 min chart)
The VERY best trade setup is to wait for the following:
1) Let these 5 waves on a lower time frame complete
2) Wait for an ABC correction back towards the 50%, 61.8%, 78.6%, and 88.6% Fibonacci retracement (place a Fib on the entire up move on the 30/60 min chart)
3) Any of these Fibs could be bouncing spot
4) Put the stop loss underneath the bottom at 0.8310
5) The -0.272 target is at 1.07 but aim for the top of wave 3 at 0.98, which is the conservative target for a weekly wave 5
6) The potential reward is 1,500 pips, compared to either an 80 / 100 pip stop loss depending on when price retraces and which Fib a Forex trader uses for entry
7) Once price completes the ABC for wave 2, then a wave 1 of wave 3 of wave 5 should unfold and the price should start moving up impulsively
What is your favorite currency pair setup this week? Let us know in the comment section down below!
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