Hello Forex Traders!
To sum up last week’s Forex market in 1 word: slow. Most of the movement was at a snail’s paced speed. There were some intra-week trading opportunities and our trading room capitalized on those, such as: GBPUSD long (twice), AUDCHF short, CADCHF short, GBPAUD long. But it took long before the market “broke” free of its range and the best opportunities only materialized on Wednesday and Friday.
The FOMC impulse to the upside is still dominating the scenes and very little has happened ever since: the EURUSD has been in a range for 7 trading days after FOMC. On Friday price finally broke to the upside but it could not break above the top.
Could this mean double top? Maybe. Then again Friday’s are never a great day for big sustainable breakouts so a rejection off of the top could have been expected. Obviously the same characteristics remain in force:
1) Weekly resistance trend line is broken (purple)
2) Uptrend on 4 hour and daily charts
3) Strong FOMC surge to upside
4) Shallow retracement (236 Fib)
UP scenario – with those factors in place we should remain focused on upside continuation. A break above the 1.3570 top means that price is breaking above the -0.272 target and it’s on its way to the next target:
1) 1.37 à the top of the daily chart and -0.272 target
2) 1.38-1.3850 à the -0.618 targets
3) Be careful of 1.36, it could be a resistance level as it is the 886 Fib of the entire down move and could potential still be a bigger wave 2 if the 1.37 top does not get broken.
DOWN scenario – however, if the current bottom at 1.3460 gets broken, then we could expect a deeper retracement before upside continuation materializes. A retracement back to the 618 Fib level is a decent possibility. Although in fact any of the Fibs could be a potential bouncing spot, of course. The 500 and 618 Fibs do have an extra attraction, and that is because price would be hooking back to the break out level of the weekly trend lines, which would act as a strong extra support.
MONTH & QUARTER END
First of all, be very careful with trading today. It is the last trading day of the month and quarter so unexpected movements could occur on days like these.
Second of all, it also means that Forex traders have a new time frame to examine: the monthly chart and its monthly candle!
And the monthly candle for the EURUSD is currently (with 1 day left) bullish and little wick on top. It also engulfs last month’s bearish pinbar. With such momentum in play, October and November might very well see upside continuation unfold, but maybe after September’s candle gets retraced first?
What do YOU think is more likely: a break of 1.30 or 1.37? Write down your figure down below!
The price of GBPUSD is currently at the previous top of 1.6180. Could this turn into a double top as well? With the month of September and its monthly candle closing today, it sure could.
1) The monthly September candle could see its candle get retraced in October before moving up again.
2) Considering the quite impressive 700 (!) pip bullish candle, a break of this month’s high is very likely to happen in October or November.
3) If the Cable does break that top and resistance zone, expect a continuation of the move up towards the next resistance level at 1.6330.
That wraps it up for today! In tomorrow’s article we will discuss the USDJPY and the very interesting situation it is currently in. There could be massive weekly up trend continuation in October or November. Make sure to check it out.
In the meantime, check out this article on programming!
Good Trading in October!
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