Hi Traders! EUR50 forecast update and follow up is here. On May 20th I shared this “EUR50 Forecast And Technical Analysis” in this post lets do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!

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Now let’s summarize the idea first:

EUR50 D1(Daily) Chart Analysis – Strong Resistance Zone

On the daily chart, we have a resistance zone that has formed based on the gap zone and the psychological round number 3200. Also while measuring the two waves we have, the 100% fibonacci expansion level of the first wave at 3222 and the 100% fibonacci expansion level of the second wave at 3098 coincides with this resistance zone which makes this area a very strong resistance zone for us. Price still has room higher towards this strong resistance zone. So until price reaches this strong resistance zone my view remains bullish here, we may now move down to lower timeframes and see if we can find evidences supporting this bullish view.

EUR50 H4(4 Hours) Chart Analysis – Bullish Trend Pattern, Key Support Zone, Downtrend Line Breakout, RSI Indicator, Parabolic Sar

On the H4 chart, we had a bullish trend pattern that had completed itself which we may consider as evidence of bullish pressure. Generally, after a bullish trend pattern we may expect corrections and then potential continuation higher. Currently, it looks like the correction that we were looking for has happened in the form of two waves down. The price which was moving lower reached a key support zone formed by the 38.2% (2690) – 50% (2589) fibonacci retracement zones of the bullish trend pattern and the 100% fibonacci expansion level of the first wave at 2651. The price then moved higher and has currently broken above the most recent downtrend line, in addition to this we also had a downtrend line breakout on the RSI indicator as well, also based on the Parabolic Sar the dots are below the price, we may consider these as evidences of bullish pressure. So the bottom line here is that the H4 chart has evidences supporting this bullish view.

EUR50 H1(1 Hour) Chart Analysis – Bullish Trend Pattern, Bullish Hidden Divergence, Key Support Zone

Looking at the H1 chart we could see that the H4 downtrend line breakout happened in the form of a bullish trending pattern. Currently, it looks like a correction is happening, we have a bullish hidden divergence which has formed between the first low that has formed on 14th May 2020 and the second low that has formed on 19th May 2020 which we may consider as an evidence of bullish pressure. There are two possible scenarios here, the price might move higher directly from the current zone. Or alternatively, if it moves lower then the next area to look for bullish moves with bullish evidences would be the key support zone which has formed by the 38.2% (2847) – 50%(2818) fibonacci retracement zones of the bullish trend pattern.

EUR50 H1(1 Hour) Chart Current Scenario

Based on the above-mentioned analysis my view was bullish here. On the H1 chart the price moved perfectly as per the alternative scenario. The price moved lower, reached the key support zone, respected it and it moved higher perfectly as I expected, delivering a fantastic move to the upside. Currently, we have bearish divergence in play on both H4 and H1 charts, so if you are involved in the buys then this is a very important place to consider and manage your trade (cash out or partial cash out or trailing protections or partial hedge, etc.. depending on the strategy that you work with).

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This was a perfect setup because based on the daily chart the price still had room higher towards the strong resistance zone. While looking at the H4 chart we could see that the price had created a bullish trend pattern followed by a double wave correction and the price had broken above the most recent downtrend line. While checking the H1 chart we could see that the H4 downtrend line breakout happened in the form of a bullish trend pattern so we were expecting a correction and then potential continuation higher. The correction that we were looking for happened perfectly in the form of double wave down and the price respected the key support zone formed by the 38.2% (2847) – 50%(2818) fibonacci retracement zones of the bullish trend pattern and moved higher exactly as I expected.

So, traders, this is why I wanted to show this example to help you understand how important it is to follow the facts. When the facts do happen as we expected you can see how the price perfectly moved as per the plan. Because these are the kind of hints the market provides us at majority of the times and it’s our obligation as traders to be able to listen to these things that the market tells us and we should try to make the right actions”.

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To your success,

Vladimir Ribakov
Certified Financial Technician

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