EUR/USD, step by step down…
If we take a look at smaller H1 time frame, we could see how technical ‘works’. Downtrend channel push the pair down, step by step all the way to 1.0520, where the pair has found current support. I mention that level aprox 1.0500 in my previous analysis, as an possible first line of defense. Could Euro bulls reverse the situation now and push the pair true the 1.0610/30 resistance today? That level hold the pair on the recovery attempt last week. Let’s see what will happen today!? Sellers are ready!
I agree that there is support down at 1.0520 as evidence by the bounce. The Prior to last month, support in the area was last tested by in the Winter of 2002/3. The support held on todays test and the price action has bounced back to the levels where the daily candle started. There is still just under four hours until the daily candle closes, and if it were to close now it would be a dragon fly doji. It appears at the bottom of at down trend and could indicate a reversal. It is now a month since any lower lows were made and the 20 period daily Donchain Channel is starting to turn up.
Looking at things generally, I do think that there is increasing evidence to suggest that there may be another EUR/USD rebound and by the end of the week we will be possibly be seeing 1.1000. The only fly in the ointment is the daily kumo, the bottom of which sits at 1.07891 at the end of the week. It may be that the bottom of kumo will act as resistance and hold the price action down to below 1.0750. Future kumo is relatively thick and that tends to make any penetration challenging. Thus I do not think that we will see 1.1000 again this week although I do think the price action will head to the long side and be held Just below the bottom of kumo.
Alternatively if the lower daily 20 period Donchain Channel is broken, then I think that it all roads south again. The lower Donchain Channel sits at 1.05203. Interestingly the original Donchain Channel trade would have opened on 16th July 2015 when the price action broke below the Channel which was at 1.35418. Had the Donchain Channel trading rules been observed, the trade would still be open and showing a profit of nearly 3,000 pips.
Thus I do think that the correct trade at present is ‘no trade’ and when a direction starts to show up, start opening positions.
So, you expect double bottom at daily!? Possible, yes. I am looking at this red daily candles, 8th day in a row today. When euro is falling, it’s falling for real. Hard on the way up, easy to go down!