Welcome to today’s blog!
Yesterday we did an exhaustive analysis on the cable and the future seems to have been predicted pretty well so far! The article can be found here.
And the crystal ball worked again!
The Cable is sinking, and it is sinking fast!
The up move indeed turned out to be of a corrective nature as predicted with the Elliott Wave analysis. The GU turned at a dime on the 618 Fibonacci retracement level and has been moving down violently ever since.
The GU seems to be headed for another down move. Although one must always be careful for breaks of bottoms and tops. Those areas are actually dangerous areas as in some cases the sellers lose control over the market and the bulls are able to regain (temporary) control.
However, the chances of another down tomorrow or Thursday seem high. There is still plenty of space to the targets at -0.272 Fib of the last wave down at 1.5540ish area. A move down to that level would be probable. The question is when. Especially if we look at the day chart and those bearish engulfing day candles close in similar fashion.
If we do get a similar close, that would of course mean that the weekly up trend line is getting our sight. Will we see a break or bounce? If we do get a break then this could turn out to be a bigger down move… but only time will tell. It will be interesting to see how this and next week’s price action closes relative to that trend line.
In other markets, the EURUSD made a gigantic fall of 250 pips yesterday in the later part of the trading session, but it recovered quickly during the open of the European and London trading day.
The EURUSD has recovered more than half of its fall and the power to the upside seems strong and a move back up to test the top seems likely.
However, any traders who are in the buy should be careful of the 1.3650 area. This is the 786 Fib retracement of the move down and it could be a price level where the EURUSD will pause, retrace, or even move back down again.
Move back down? Yes. The raging bull down? Well maybe. The Euro of course is in a strong up trend, but the last down move might still be part of a bigger correction. There is no question in my mind that the EURUSD will move up higher to at least the 1.38 area.
The question is will it be now or a bit later?
The engulfing day twins were very impulsive and the EURUSD has not seen such bearishness for a while. A continuation of that bearish candle could still be an option. But price action will give us the clue whether EURUSD continues up immediately or after 1 more pullback.
So all in all, the best tactic is to take some profit at the 1.3650 and 1.37 levels and hope for a break for the rest of the position. Here is a great article about taking partial profit.
For those of us who are in the EURUSD buy, then letting today’s price action settle down and taking a clear view tomorrow might be a good advice. An important factor in that decision will be how today’s day candle closes as well.
I wish you Good Trading and let me know if you want me to review a specific currency!
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