Since my last post, a few interesting things have happened with this cross. In the weekly chart below, we can see that last week bar closed outside the mid-term trend line indeed. The current weekly chart is not closed yet but with one more day of trading, more than likely, it will close similar to what we see right now, which tells us that the longer-term trend line has been broken. An important aspect to consider here is the major support of 1.000 has been breach and price traded below it. A closed candle would be better to confirmation, but the downside is more likely to continue.
Comparing the daily chart from my last post, price defined a downtrend channel (in clear blue) and we have expected a bounce to the upside due price could find support at the lower line of the channel and also the orange trend line. This actually happened! And as a logical resistance zone, price re-bounced back to the downside. The chart below illustrate this but in the 4H chart will be clearer. From today's chart, we are sure that the trend channel is broken downwards (actually with yesterday's close this was a fact) and today's close ended as an indecision bar. I'm still bearish on this one, but this candle could give us some problems.
A few thoughts...We have to remember that behind charts, there are persons watching the same charts; these people make decisions therefore open/close positions, which at the end is what we see every single day plotted. Does this people know what are they doing? As I've read in many places... no. 95 to 97 percent are throwing away money to the market, actually to the 3-5% which do know what they are doing. Sad statistic but...
I'm trying to jump to the other side of the fence.
All of this comments due today's candle. This bar could be a major reversal for price, but I'm almost sure that was formed because of people covering short positions or even opening new long ones. Time will tell what price decides to do. Is the major psychological support of 1.000 influencing people? One major concern that I have is the stochastics. While in the weekly is bearish and not oversold yet, in the daily we are almost at the crossover; the weekly would suggest there is still room to go a bit more further in the downtrend though the daily is reversing... to soon?
As explained in the previous analysis, price almost reached the 0.9953/30 zone, shy just for 26 pips. I'm not discarding this price target and there are some other confluences that confirm this as a possible short-term price target zone.
Now in the 4H chart... I would like not to make this entries so long but if it's necessary... Well, a glance of the chart would explain the following words better. From the last short-term trade opportunity, price did bounced to the upside and found resistance in the previous support line (support became resistance) where the last setup almost repeat itself. Again, I didn't take it. I should have though. Here some other harmonic considerations with fib extensions and projections suggests the cluster around 0.9956/33, more than likely, will be reached. With the previous low relatively close (0.9930 april 21st 2010), price could be attracted to test it again and probably go through it. If price takes out this value, the next low is at 0.9056 (november 07) which could act as major support.
Tomorrow there are some news events that could cause some spikes, nevertheless, that's scalper's worry, not mine.
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