On the daily chart (above) we see that yesterday's daily candle formed a doji and market formed a kind of double Top. The Euro dropped in today's European and US session and currently market penetrates the daily trendline and the Euro is close to the 20 SMA (purple line). On the 4-hour chart (left) we see that the Euro touched (respected) the daily trendline (red) with the closing of the 4-hour candle at 4 p.m.. The Euro initially dropped further with the beginning of the new 4-hour candle starting at 4 p.m. (Timing) and the Euro penetrated the low of the 18th of June (green line).
On the hourly chart (left) we see that the Euro found resistance at the 61.80 % fib retracement (1) yesterday in the US session. Today, the Euro found support at the monthly pivot point in the Asian session (2) and moved up to the 20 SMA (3) where the Euro bounced back. The Euro moved down and penetrated the monthly Pivot point at 8 a.m. whereby the breach of the recent low (grey line, (4)) did not get confirmed on the 5 min chart (stop fishing). From there, market moved up and finally penetrated the daily pivot point at 1.2691 (5), however, the Euro did not confirm the breach on the 5 min chart (no higher close of the succeeding candles above the range of the breakout candle at 12:20 p.m.) and market formed a strong one-hour rejection candle (long tail of the 12 a.m. candle). In the following, the Euro dropped down strongly. The 2 p.m. hourly candle respected (touched) the support level at 1.2624 (pink line-Januarly low, orange circle) and market initially breached this level with the beginning of the 3 p.m. hourly candle. The same pattern occurred at the hourly 200 SMA and the daily trend line (red line). Market touched this support level and immediately after the close of the hourly and 4-hour candle at 4 p.m. (Timing) the Euro breached this support level and resumed its downward trend (black circle).
The 5 min chart (above) shows the failed breakout confirmation at the grey line (NYSE:A) and the daily pivot point (NYSE:B). The red circle illustrates typical price behaviour around support and resistance. The 1:35 p.m. candle breached the monthly pivot but could not close below, however, the second breach got confirmed on the 5 min chart from the 2:05 p.m. candle. The Euro moved up again but market could not regain the prior support level (no confirmed close above the monthly pivot). The Euro also found resistance at the decreasing 10 SMA (red line), and the 5 min candle at 2:15 p.m. closed as a doji. The monthly pivot point now acted as resistance and price moved down. The green circle shows the bearish consolidation (bear flag) at the pink line (January low). The Euro breached this level at 3 p.m. initially after the hourly candle closed at this support level. The same price behaviour occurred at 4 p.m.. In a strong bearish or bullish environment market often close at key levels and after market respected these levels with the candle close these levels often get breached with the beginning of the new candle (either for a false or confirmed breakout-Timing). This price behaviour is visible on all time frames. The blue circle on the 5 min chart shows the retest of the orange line (low of August 2010) after this level got breached (confirmed). The 20 SMA also pushed the price further down (trend continuation).
Wednesday, June 20, 2012
The daily high of the 11th of June at 1.2669 is another key level (blue line). Today, the Euro found some support at this level in the Asian and beginning of the European session (hourly chart left). The Euro traded in a tight range prior to the FOMC market release.
On the 5 min chart (below) we see that market formed a kind of Head & Shoulder pattern (ABCDE). The break of the brown neckline got confirmed with the news release at 5:30 p.m. GMT. Just prior to the news release at 5:25 p.m. the Euro bounced back from the 100 % fib extension from C-D at E and market closed in the range of the preceding 5 min candle. After the news release the Euro (5 min candle-5:30) initially moved down to the H & S target at around 1.2665 (B-D at F - blue circle, F= neckline break), also 161% fib extension C-D at E. From there market bounced back before the Euro resumed its downtrend to the weekly pivot point where the Euro found strong support and moved up again. The Euro found some resistance at the brown neckline (touched-respeced it, red circle) before market finally broke the neckline to the upside with the beginning of the new hourly candle at 6 p.m.. The chance of a temporary continuation of the uptrend and a breach of the high of the 5 p.m. hourly candle got increased due to the 5 p.m. hourly rejection candle (long tail) and the hourly close at the neckline. The 6 p.m. hourly candle breached yesterday's high. The volatile market after the news release led to a clearing of the stops below and above today's "pre-new release" trading session, which is not untypical for a news release (stop fishing targets).
Tuesday, June 19, 2012
EUR/USD Market Recap 19.06.12
On the 1 hour chart we see the changing role of the key level at 1.2588 (August 2010 low-orange line). Yesterday in the US session the Euro closed below this level at 3 p.m. GMT and in the following the Euro found resistance at the orange line. However, the Euro got supported by the hourly 200 SMA (black line) and the EUR/USD move above the orange line again in today's overnight session. Now, the orange line acted at support (prior resistance becomes support) and the Euro did not close below this level on an hourly basis. EUR/USD penetrated the orange line between 9 a.m. -10 a.m. but market bounced back again from the 200 SMA (yesterday's consolidation also provided some support at this price level) and closed finally above the key support.on the hourly chart. From there, the Euro moved up to the next key level at 1.2624 (pink line-January low). The Euro could not overcome this level for a while, however, EUR/USD also did not significantly bounced back from this resistance. The resistance got further strengthened due to the daily pivot at 1.2629. Market formed a bull flag on the hourly chart and the Euro broke through resistance (pink line) with the beginning of the 2 p.m. hourly candle after market repeatedly slightly penetrated this level during the three hour consolidation (bull flag-eroded resistance over time). Moreover, the bull flag terminated exactly at the 100 % time projection of the prior upswing (A-B at B, 5 min chart below).
After the break of the strong resistance (pink line) market gained strong bullish momentum.
The 2 p.m. hourly candle closed above the weekly pivot, the 3 p.m. hourly candle above the monthly pivot and the 4-hour candle closing at 4 p.m. closed (respected) at the 61.80 % fib retracement and market breached the 61.80 % fib retracement initially after the 4 hour candle closed (red circle on hourly chart).
On the 5 min chart we see that the Euro initially moved to the 61.80 % fib extension (A-B at C) after the breach of the pink line. The Euro found some resistance there and bounced back to find support at the rising 10 SMA (red line) on the 5 min chart and the Euro got repeatedly pushed up after touching the rising 10 SMA (strong bullish momentum).
The 5 min chart also highlights the changing role (support/resistance) of the orange line. EUR/USD repeatedly reacted at this level (1.2588).
Monday, June 18, 2012
EUR/USD Market Recap 18.06.12
The 2 a.m hourly candle found support at the 10 SMA (red line) and the Euro started to retrace up to 1.2725 supported by the rising hourly 10 SMA. After the end of the upward retracement the Euro resumed its downtrend and closed today's gap.
The 8 a.m. hourly candle respected (touched) the hourly 20 SMA (purple line) after the Euro consolidated between the 20 SMA and 200 SMA on the 5 min chart, and the Euro initially broke through the 20 SMA with the beginning of the new hourly candle at 9 a.m. (London open-green circle on 5 min chart). The Euro found some temporary support at the pink line (low of January) and formed an abc-retracement up to the monthly pivot point. From there, the Euro bounced back and penetrated the pink line again but market could not confirm the breakout on the 5 min chart . However, the Euro made a hourly close below the daily and particulary weekly pivot point (11 a.m.) and confirmed the break below the daily and weekly pivots on the 5 min chart. The following retracement went up to these pivots and the 20 SMA on the 5 min chart which now all acted as resistance (red circle). EUR/USD bounced back from this resitance, which also coincided with a retest of the gap opening (brown line) and the Euro finally breached the low of January 2012 (pink line). The Euro found some support under the low of Friday (initial target reached = stop clearing-The first breakout is very often not confirmed). Moreover, the orange line highlights the low from August 2010, which acted as support. Market retraced up from there (abc-retracement) but as market resumed its downtrend at 3:30 p.m.the Euro breached the orange line and confirmed the break on the 5 min chart so that the orange line became resistance on the 5 min chart and market's upward correction terminated at this resitance at 5:50 p.m..The daily S2, the 200 hourly SMA, the 61.80 % fib retracement of the recent daily upswing and the 100 % fib extension (1-2 at 3) give some support around 1.2550-1.2565.
Friday, June 15, 2012 EUR/USD Market Recap 15.06.12
On the 4 hour and 1 hour chart we see that the Euro very often closed at the low of January 2012 at 1.2624 (pink line), which coincides with the daily high of the 7th of June and the gap opening on Monday. Particularly on the 4 hour chart we see that every candle today closed at this important level. On the hourly chart we see that the Euro respected the 61.80 % fib extension at 5 a.m. (recent high) and price moved lower from there. On the 1 hour and 5 min chart (below) we see a nice Head & Shoulder formation. At 11:15 a.m. the Euro breached the neckline (brown line)
but market could not confirm this breakout (first test). The second break of the neckline occurred at 12:45 p.m. and market moved to the 100 % fib extension
EUR/USD breached the daily pivot point, however, the pivot point, the 4-hour 10 SMA and trend line (4-hour chart) supported the market. The Euro managed to close above the neckline on the hourly chart at 2 p.m. after a choppy price action between the neckline and the weekly pivot.
On the 5 min chart (below) we again see the importance of the pink line and its changing role from resistance to support vice versa. The Euro formed a bull flag on the 5 min chart and in the following closed above the pink line after market already regained the neckline with the hourly close at 2 p.m.. The Euro bounced back from the pink line at 5:25 p.m. (now support) and cleared the stops above the recent high
. However, market could not close above the recent high on the 5 min chart at the first breakout (only stop fishing) and the Euro fell back again.