Trading is much easier in hindsight! I completely misinterpreted the strong bearish support in EA in my last analysis. Let’s take a fresh look:
My contrarian tendencies can be a real burden sometimes, as I fail to see potential breakouts 9 times out of 10. Definitely something to work on.
GBP continues messing up the markets after the Brexit. Another pointless spike has happened early in the morning, just to close your stop losses with a huge gap and then retrace back to where it was before. Such situations are only further confirming that trading on lower timeframes is not safe any longer. If your stop loss would have been 100 pips, you would have lost “just” 5-6 times your planned risk (depending on how well your broker would execute your stop order). With a stop of 20-30 pips, you would have lost 20% instead of your planned 1%.
As mentioned earlier this week, EUR has managed to form a bullish cycle on Weekly. However, the price action has been quite week and it does not seem likely that EUR can pull off breaking very strong resistance on almost every single pair (see the picture).
JPY has bounced from its support areas as well, and will possible continue trading in the Daily range, as seen on the charts.
Overall, EJ is a good trading pair to watch for a potential bearish trend.
The market has been stagnant on higher timeframes for a long time right now. After the Brexit and before US election the money is hesitating to move.
UJ continues moving in the same range for the fourth month. USD looks like a complete mess on daily, with most pairs showing very choppy price action. JPY has been creating some cycles, notably with increasing bearish strength.
How much higher can JPY go without a significant correction? If the last 3 months has restored the balance on the Market and if JPY is unable to descend soon, the bullish cycle will continue with some significant strength. Notably, most JPY pairs are breaking their Daily trendlines right now. Notably also is that no JPY pairs (other than GJ – barely) have managed to break their Brexit highs.
EUR has been probably the most flat currency in many, many months. Looking at its cycle (blue line on the right Daily graph), it has barely managed to reach the high on a couple ocassions, just to be instantly rejected – not the most bullish sign. Looking at the currency profile on the left, the market has found value on this currency on almost all trading pairs with an interesting triangle on Weekly on EA and on Daily on EU (see first chart).
GBP on the other hand is trading in a seemingly permament bearish cycle. It is testing post-Brexit lows right now, for the third time in 3 months. The main question is – how much longer can this trend continue? How low should it go that traders would refuse to sell? If the price shows acceptance just below the Brexit lows, we are in for another ride.
Interesting to note though, that GBP is starting a bullish correction right now. The price action of the next 2-3 weeks could help to see the picture more clearly.