Dollar: Flow has changed to bullish. Appears to be bouncing off weekly S1/79 fib.
COT: Slightly bullish on EUR
OI: Slightly bullish
Market Structure: bullish
Market Flow: bearish
S/R: 1.3030, 1.2995
SMT: GBP and USD failing to continue trend
Misc:
Trade
Entry:1.3057
Risk: 44 pips or approximately 0.25%.
Reasons: EUR currently sitting at weekly S1 where it has just made a new low following a high high. GBP failed to make new high and USD failed to make new low, flow on both has also turned favorable. USD seems to have bounced at the 79 fib corresponding to weekly S1. EUR failed to break the 90 fib.
SL: 1.3101
Profit target: 1.2970
Negatives: PPI and retail sales due out later today. Market structure has not yet turned bearish on EUR as it has on GBP and USD. Seasonal charts seem to suggest a possible bullish move.
My break was a little longer than I intended, but I am picking up where I left off.
Based on the monthly, weekly and daily, I am leaning toward a risk off environment. The COT data seemed neutral on bonds and the three currencies I watch. I noted that both EUR and GBP have bearish weekly divergence. I noted that USD has nested OTE on the daily.
I will pick up with further analysis on the lower time frames this weekend and begin trading again next week.
EDIT: I had a $0.15 loss for December or -0.09% return. However, it was -0.74% from the peak of the month.
I am expecting a risk off week. I will be watching 1.337 on EUR for a possible short and 1.598 on GBP. USD should be around 79.80 at the time. Will wait and see what sets up.
I did not have a trade this week. The price action early in the week looked very odd and scared me away from taking any trades. I will up date this weekend with current analysis.
I decided to take a long at 1.33759 with 1 nano lot. Stop loss at 1.33359 for a 40 pip stop. It is based on overlap of OTE,RTE and expansion targets. The USD also failed to make a higher high when EUR made a lower low. GBP was also making highs. I will post more detailed analysis later with charts.
There is also serious trending divergence on daily. The market structure is bullish, though market flow is still bearish. EUR has been trending up and I expect it to for sometime until it reaches 1.4 and maybe even 1.43. EUR and USD also displayed SMT at the time of the trade. Today they again have SMT present with USD making a higher high and EUR failing to make a lower low.
I will try to not go so long without posting analysis on trades I take. Without the analysis this will be useless to me as reference and to anyone else that should happen to read it.
EDIT: Forgot to mention that USD was at the time of the trade and still is at bearish OTE.
SL moved to BE. I would take partial profit, but since it is 1 nano lot it can’t really be divided anymore. Will be watching how it reacts in the bearish OTE area around 1.35-1.353.
It will be interesting to see if GBP forms a LTL around the area it is now. According seasonal chart it may be approaching a low in late Feb. Counter trend divergence is building up on multiple time frames as well.
OTE
Extension
RTE
If it forms a LTL it will be nice for longs for a few months.
This weekend I’m going to talk about what this journey is all about. Granted – I’ll only highlight one aspect of that journey. Some might have longer holding periods they like to stick to. Some might prefer switching positions on a much more frequent basis. It all comes down to the same. Getting exposure to opportunities. Here’s a quote from Nassim Nicholas Taleb’s book ‘The Black Swan’ describing that phenomenon.
“… seemed to follow implicitly, though not explicitly, Louis Pasteur’s adage about creating luck by sheer exposure. ‘Luck favors the prepared,’ Pasteur said, and, like all great discoverers, he knew something about accidental discoveries. The best way to get maximal exposure is to keep researching. Collect opportunities…”
Hoping for EUR to move to around 1.32 which is a daily OTE. Will look for a setup if it gets there. Will be watching GBP at 1.358 as it coincides with the 90 level and also a 261 fib level. If USD makes new highs and EUR fails make new lows I will probably take a long before 1.32.
EUR has made a lower low and USD failed to make a higher high. Currently EUR trading around 1.3170. I don’t really feel comfortable trading this late in the day and after such a sharp drop. I will wait to see what the Asian session and early London does.
Ideally, price will move up and take out the recent high at 1.323 and then move back down for a good entry during London.
The price action this week has convinced me that we are entering a risk off period. GBP has dropped below lows it has been unable to penetrate for over a year. EUR came within about 20 pips of making a new low for the year. I would like to see it make that new low to align with GBP. USD surpassed the high from Nov of last year, leading me to conclude that the market flow is indeed risk off.
I think we will see a bullish Thursday and Friday for the EUR, may get an opportunity to enter short around 1.3250.
Shorted 3 nano lots a 1.30268. USD made a lower low while EUR, at higher OTE, failed to make a higher high and formed a nested OTE. USD also had bullish counter trend divergence. Stop loss is at 1.30485.
First spot it may have trouble is the 1.2995-1.3 level.
The ECB press conference in 15 minutes will decide the fate of this trade… If they mention anything about monetary easing then euro will have a nice little tumble
EUR and USD have formed SMT. I think I will wait for it to come to 1.302 which is a lower timeframe OTE and also near short term resistance. Waiting to see what the retail sales are, don’t want to get burned by news again.
USD lower lows
EUR missed my order by a few points. I ended up taking a GBP short from a nested OTE at 1.49708 with an initial SL at 1.4985. I have reduced the stop loss to 1.498 though since it dropped so fast. Position is 3 nano lots, current risk has been reduced from $0.45 to about $0.27 or about 0.15%. The GBP had more bearish market structure than EUR.
