Navigating the Market : EURUSD 21st Sept 2019
In terms of sentiment & fundamental analysis, last week and this coming week I have established a bias**. The bias is that I am moderately bearish on EURUSD (weak bearish) ECB is in quantitative easing mode whilst the Fed had done a hawkish interest rate cut.
**There will be a week when I do not have a fundamental/sentiment bias due to my limited knowledge on the matter but when I do, I put this bias on top of anything else, above Technical Analysis. Having said that though, I rely heavily on Technical Analysis to tell me where and when to trade.
In terms of Technical Analysis, the EURUSD is still in bearish mode (tho weakening). I look at the Daily Chart, even though our eyes would scream "EURUSD has gone bearish too long now". That is classical retail trader way of thinking. Picking tops and bottoms, claiming Euro is too cheap etc. I disagree with this completely. I am NOT saying the price would continue moving another 200-300 pips downwards (even though that is what I am anticipating because I am, after all, bearish bias EURUSD) but the average leg/wave for EURUSD (Daily Chart) before it retraces more than 38% of the impulsive wave, is 589 pips. Current wave/leg barely touches the average.
So, anyway.. quick hindsight-reading-the-left-side-of-the-chart analysis to make me sound stupidly smart: the EURUSD had been trading in the range since 5th September. It is true on the 12th and the 13th this pair broke above the trading range but that was due to the institutional liquidity run (conveniently coincided with the ECB Rate Decision). The pair traded back inside within the range until NY closes on Friday.
Now, time to read the right side of the chart instead. The nearest liquidity that I have identified is in between 1.10250 and 1.10400. Small retracement usually has stacks of orders that institutions love to consume. If price enters this zone I will be on Bearish standby mode waiting for a short signal. If the level I explained above would be broken through then I will be looking at the next level which is between 1.10750-1.0900. It would break the Friday High and that usually activates my bearish mode.
Risk Events on Monday for the EU are the Flash Services PMI, German Flash Manufacturing PMI and German Flash Services PMI. Nothing for the U.S
**There will be a week when I do not have a fundamental/sentiment bias due to my limited knowledge on the matter but when I do, I put this bias on top of anything else, above Technical Analysis. Having said that though, I rely heavily on Technical Analysis to tell me where and when to trade.
In terms of Technical Analysis, the EURUSD is still in bearish mode (tho weakening). I look at the Daily Chart, even though our eyes would scream "EURUSD has gone bearish too long now". That is classical retail trader way of thinking. Picking tops and bottoms, claiming Euro is too cheap etc. I disagree with this completely. I am NOT saying the price would continue moving another 200-300 pips downwards (even though that is what I am anticipating because I am, after all, bearish bias EURUSD) but the average leg/wave for EURUSD (Daily Chart) before it retraces more than 38% of the impulsive wave, is 589 pips. Current wave/leg barely touches the average.
So, anyway.. quick hindsight-reading-the-left-side-of-the-chart analysis to make me sound stupidly smart: the EURUSD had been trading in the range since 5th September. It is true on the 12th and the 13th this pair broke above the trading range but that was due to the institutional liquidity run (conveniently coincided with the ECB Rate Decision). The pair traded back inside within the range until NY closes on Friday.
Now, time to read the right side of the chart instead. The nearest liquidity that I have identified is in between 1.10250 and 1.10400. Small retracement usually has stacks of orders that institutions love to consume. If price enters this zone I will be on Bearish standby mode waiting for a short signal. If the level I explained above would be broken through then I will be looking at the next level which is between 1.10750-1.0900. It would break the Friday High and that usually activates my bearish mode.
Risk Events on Monday for the EU are the Flash Services PMI, German Flash Manufacturing PMI and German Flash Services PMI. Nothing for the U.S
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