Hi Traders! EURUSD short term forecast follow up and update is here. On August 2nd I shared this “Technical Analysis – EURUSD Short Term Forecast” post in our 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!
My Idea
On the H4 chart, we could see that the price which is moving lower has created a bearish trend pattern in the form of three lower highs, lower lows we may consider this as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then further continuation lower. Currently, it looks like the correction that we were looking for is happening in the form of potential double wave to the upside. In addition to this, we had a bearish divergence that has formed between the first high that has formed at 1.02691 and the second high that has formed at 1.02937 based on the MACD indicator, we may consider this as other evidence of bearish pressure. Also, while measuring this bearish trend pattern using the Fibonacci retracement tool we have two key resistance zones that has formed. The first key resistance zone is formed by the 38.2%(1.02052), 50%(1.02833) Fibonacci retracement zones of the bearish trend pattern and the 61.8%(1.02978) Fibonacci expansion level of the first wave of the correction. The second key resistance zone is formed by the 61.8%(1.03615) Fibonacci retracement zone of the bearish trend pattern and the 100%(1.04223)Fibonacci expansion level of the first wave of the correction. Until these two key resistance zones hold my short term view remains bearish here and if we get a valid breakout below the most recent uptrend line we may then consider it as a validation for this bearish view.
EURUSD H4(4 Hours) Chart Current Scenario
Based on the above-mentioned analysis, on the H4 chart, my view was bearish and I was expecting the price to move lower further until the two key resistance zones hold. The price action followed my analysis exactly as I expected it to here. After the bearish trend pattern the pullback that I was looking for happened and the price didn’t hold in the first key resistance zone, it moved higher further and reached the second key resistance zone, respected it and moved lower from this zone. Also, the price which was moving higher created a bearish divergence between the first high that has formed at 1.02779 and the second high that has formed at 1.03685 based on the MACD indicator. The price then moved lower and broke below the most recent uptrend line which we may consider as the validation for this bearish view and also there we no signs opposing this bearish view. The price then moved lower further and delivered 330+ pips move to the downside until it was blocked by a bullish divergence.
So, traders, this is why I wanted to show this example to help you understand how important it is to follow the facts. The facts were supporting the bearish view here and there were no signs against it. 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 accordingly.
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Arvinth Akash
Traders Academy Club Team.
