With two more bars no much has change in the chart. What really catch the eye is last week behavior with a drop closing below the trend line drawn. Is it too soon to change the sentiment from bullish to bearish? I don't think that would be necessary at this point. The previous bar though closed as a doji with long wicks (could be considered as a spinning top) which made a higher high at 1.6107. This week bar took out the low, making a lower high. Is price making a reversal?
The next week close will provide a better picture of the situation. Price might be in just a correction (of the short term uptrend), so the further upward movement is still valid until the "B" low is taken out.
I've drawn a couple of lines I considered interesting. Watching the indicators (sincerely... I don't know why to bother) there is divergence on macd and the dtosc just made a bearish crossover.
Daily
Going closer, the daily and the 4H provides a better idea of price action. In this two past weeks, price retested the trendline to make a higher high within 6 months. Price formed a reverse hammer on friday 15th.
With last friday's close (22nd oct) it seems the purple trend line has been broken to the downside but price has found support at 1.5650. A close below this level would suggest further decline but price has first to beat a few support levels on the way if it is going to test the previous "B" low at 1.5297
Again, from this chart, my perspective is still bullish.
4H
Here I'm posting two 4H charts; one including all the past data from my last post of this pair, and the other with a zoom to recent price action.
Analyzing the first chart we can see Price indeed behaved as expected within elliot wave theory. Not quite exactly but at least in shape. Comparing last blog post 4H chart with the one below, price formed an impulse 5waves upward movement. Wave 4 found support at the 50% w3 retracement and the 120sma as confluence (second 4H graph). Price took off upwards taken out the w3 high and reaching the 127% fib extension from w4 and just shy from the channel projection. Wave 5 was really short lived but also developed into 5 waves. How we know last impulse movement is complete? Price has taken out w4 low.
If price completed a 5w impulse movement, a three wave corrective movement should occur (from the elliot wave perspective). If we are right now in this correction, a further decline would happen. I have labeled the "a" and "b" waves, but those would only be confirmed if price breaks the "a" low. Price might develop in a more complex correction than a simple abc or zigzag as it's called, but we always are assuming a simple one, so when Price gives us the information, we should react accordingly. Is price in a w2 of wave C?
Commenting the zoomed 4H chart. This is going to be a horrible week to day trade. Price has defined a 229 pips range with long bars and some inside bars. A few "important" resistance/support levels and round numbers are near or within the range so it's going to be a interesting time to watch price action next week. Will 1.5650 hold or break? Prudence...
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