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EURUSD scenario follow-up – What we delivered and what is to come

Predicting the corrective move

In our initial analysis titled “EURUSD – Time has come for a dearly needed correction” we posited that a correction should take place on the pair due to the price meeting a strong resistance area on the yearly, quarterly and monthly time frames:

EURUSD Weekly Price Chart

EURUSD meeting resistance area

And therefore the following corrective move was suggested whereas we initially proposed to place a stop-loss at the 1.198  level:

EURUSD Daily Price Chart

Corrective scenario (4 Sep 17)

Initial short trade positioning

The follow-up of this trade was done via our Twitter feed and on September 6th we proposed to lower the level of the stop loss while the trade had not moved in our favor:

2017-10-01_18-39-33

Lowering the SL on EURUSD (6 Sep 17)

Unfortunately the trade got stopped out but the loss could be kept at a minimum (which is the reason for placing a stop-loss) and on September 10th we transparently reported on it:

2017-10-01_19-02-33

SL hit on EURUSD (10 Sep 17)

Short trade reloaded

What ensued was that the pair corrected almost all the way up to build a double-top, which was identified on Sept 22 on the hourly time frame as a point of reversal:

2017-10-01_19-08-43

Calling the EURUSD top on hourly chart (22 Sep 17)

Double-bliss on short and long calls

This EURUSD double-top reversal was a perfect call since from the time it was made (red arrow on the chart here below) the pair cascaded all the way down near to 1.17 where we actually precisely called the bottom only 4 pips away from the low marked that day:

2017-10-01_19-19-10

Top and bottom calls on EURUSD

The bottom (green arrow on the chart here above) was actually called on Sept 27th based on a strong conjecture of technical parameters of the extended move lower on the 4-hour chart:

2017-10-01_19-28-03

Bottom call on EURUSD (27 Sep 17)

While the expected bounce took shape we then advised a few hours later to take profit at 1.1896:

2017-10-01_19-33-35

Take profit at 1.1896 on EURUSD (28 Sep 17)

The wait was not too long as the target was then reached later on during the day:

2017-10-01_19-36-37

Target reached on EURUSD (28 Sep 17)

What’s coming next on EURUSD

So where do we stand from there?

On the yearly time scale it is not yet clear if the pair has hit a wall of resistances or if it could break above the first level of resistance to reach the second level as shown here below:

2017-10-01_EURUSD_UTY

EURUSD yearly resistance areas

This hypothesis appears plausible on the weekly chart due to strong bullish signals and the break out from the long term foundation and therefore the pair could be heading towards the 1.25-1.28 area.

2017-10-01_EURUSD_UTW

Bullish EURUSD weekly configuration

On the shorter term however, some more consolidation could happen in direction of the rising M7 moving average crossing over the red support/resistance line in the 1.15 area.

More bull power

The longer term bullish scenario is supported by sentiment indicators such as the historical trading positions ratio, which is massively skewed on the short side despite the continuous rise of the pair since December 2016’s low at 1.034 with 64% of the positions consisting of shorts, which portends a massive unwinding potential supportive of a bull trend continuation:

2017-10-01_EURUSDLONGSHORT

There should therefore be not significant set back in the EURUSD exchange rate as long as this situation persists until a majority of positions have shifted to the long side.

Buy into weakness

The question therefore remains from which level the bull trend could resume. We do not have any strong conviction for the time being but we prefer to be buying into any forthcoming weakness of the pair to bet on the upside.

As always, any update will be done via our Twitter feed that our readers are invited to follow.

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