How to trade a pair EURUSD ahead of the holidays
From the viewpoint of classical technical analysis EURUSD pair remains in a bearish trend – each new minimum price, which is formed on the daily timeframe, lower than the previous. However, there are more signals indicating that the medium-term positions in the EURUSD sale no longer seem so urgent as previously:
Firstly, the market has reached a monthly support zone 1.2035 timeframe (!) – 1.2291, which is one of the key technical objectives for the European currency sellers. Please note that when prices close to the same level on the importance of support in 2012, the medium-term bearish trend reversed and the EURUSD showed strong growth 6 consecutive months despite the pessimistic forecasts of Greece caused by factor. The fact is that in the area of these technical levels often change the balance of power between buyers and sellers, thereby significantly increasing the probability of correction or reversal day trend:
Secondly, on the daily time frame the indicator MACD divergence continues to be formed, which warns that the market may go into flat, turn or show deeper correction (more than 61.8% of the length of the preceding impulse wave). By itself, the divergence is not a buy signal, but warns that short positions are no longer so relevant, as previously:
Third, the recent CFTC reports showed that large speculators gradually closed position to buy the dollar and sell positions on the euro. In other words, they are taking profits in bearish positions, which they opened in July as the fall of the euro (!):
Fourth, soon the holidays, the next marketing year ends, the trading activity will gradually decrease, and on the eve of New Year, the market is likely to once again goes flat.
Let us summarize what has been said. The medium-term trend in the EURUSD currency pair remains bearish, the medium-term positions on the slide may already be outdated, because the price is near the support level of the monthly timeframe. Unpredictable market can fluctuate around this level, we can see that large traders are gradually taking profits in the pair EURUSD, so we recommend you do the same.
Risks to the medium-term transactions in EURUSD of 150 – 180 points, and we at all desire can not open a medium-term position because it does not take place according to the rules of risk management – a potential trading risk higher profit potential, it will not do.
Technical buy signal appears only in the case of a confident market close above the 1.2531 resistance day timeframe. Short-term positions to buy EURUSD has relevant, since trends on the timeframes H1 and H4 are bullish.
Notwithstanding the foregoing, long-term positions (3 months or more) to sell the EURUSD remain attractive, as the monetary policy of the ECB is ultrasoft and, judging by recent statements by Mario Draghi, it may remain so for a very long time.
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