Tuesday, July 25, 2017
Scaling in - Result of Stiff Resistance
I am scaling this trade in five areas, where I am increasingly adding to a winning position.
The euro trades at 1.1648, the way that I have pieced in to the trade is in increments or layering. The next part of this set up includes adding to the short position at 1.16387, that is if the break does occur. I am looking at a possible supportive level at 1.6278 which is the area where price began bounce on July 24 in two different locations and on July 20th being the other.
The chart from yesterday shows a possible breach of resistance above at 1.7006 but it was not able to get up to the second level at 1.17157. It fizzled. That tells me the sellers were intensely pounding the EUR/USD because it is at new highs for this phase of dollar weakness (August 22 of 2015 was the last time it treated this high on a weekly candlestick and then it quickly dropped off in the next few days) I was not stopped out. The selling intensity is so strong above 1.17 that I did not put up a display any further resistance levels at 1.18 or 1.19 because it does not seem likely that it will trade that high in the next day or so, in my opinion.
Although it is possible for the Eurodollar to break 1.16278, the first lower line, I think it will buy some time for the bulls before going down to 1.1579 the shaded oval in yellow indicates another. Where a breakout occurred and could be a possible trigger for buying interest.
I would also not rule out the possibility of price dropping through both supportive areas, 1.15614 and 1.14811. The dollar fell so much that it is a knee-jerk reaction to all of the buying activity going on in the euro.
The second chart is of the dollar index sailed through the loose trendline in black I had above it. And because they were too positive closes above the trendline that leads me to believe that the dollar will trade back again at 12,000 and then 12,100 by next week. The rectangle that we can revisit from last week had to do with what I thought was but as the chart has shown it was quickly violated and what I learned was to project lower in bear markets find better opportunities.
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