Hi Traders! EURUSD forecast update and follow up is here. On June 16th I shared this Technical Analysis – EURUSD Forecast post in my blog. In this post, let’s 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:
EURUSD H4 (4 Hours) Chart Analysis – Bullish Trend Pattern, Bearish Divergence, Pivot Points
On the H4 chart, the price which is moving higher has created a bullish trend pattern by creating three higher highs, higher lows. Currently, it looks like this bullish trend pattern has completed itself. We also had a bearish divergence that has formed between the first high that has formed on 5th June 2020 and the second high that has formed on 10th June 2020 based on the MACD indicator which we may consider as evidence of bearish pressure. Generally, after a bullish trend pattern we may expect corrections and further continuation higher. Currently, it looks like a correction is happening and there are two possible scenarios here. The first scenario is that this correction might happen in the form of double wave down as shown in the screenshot below.
The alternative scenario here would be, this correction might happen inside a range as shown in the screenshot below. Both scenarios are possible here.
Also while checking the Pivot Points we could see that we have a strong resistance zone that has formed based on the weekly and daily pivot points and the price is respecting this resistance zone so far. Until this strong resistance zone holds my short term view remains bearish here and I expect corrections to happen in the form of double wave down or in the form of a range.
EURUSD H4 (4 Hours) Chart Current Scenario
Based on the above-mentioned analysis I was expecting the correction to happen here in the form of two waves or a range. On the H4 chart, the price moved perfectly as per my plan in scenario 1 and the correction happened in the form of double wave down. The price moved lower further exactly as I expected delivering around 100 pips move. Currently, we have a bullish divergence in play, this is something that we definitely need to pay attention to. So if you are involved in the sells 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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As traders we should always follow the facts, it doesn’t matter what view you had yesterday, what matters is what happens in the market today because the market is dynamic and it doesn’t necessarily have to agree with the way you see it. As long as the market follows my ideas and validates my setups I can trade and if it doesn’t switch, have a different read and turn around when required.
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Vladimir Ribakov
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