EURUSD - it's all very logical really
Last week EURUSD surprised me by going higher than expected causing me (and many other people) to get caught in losing short trades. The reason (for me) is that I was biased about where the price should be heading due to the QE measures and the strong dollar. I was sure price was to head down ...
Looking back at the week, I notice now that this price action was very logic for the following reasons :
1. We completed a bullish bat patter so we can expect a retracement to the upside.
2. The classical retracement levels for a bat pattern are the 0.382 and the 0.618 fibonacci levels, which we had not reached yet.
3. There was also the 2618 trade (double top, break of neck line and 0.618 retracement) where we did not reach that same 0.618 Fibonacci retracement.
All of the above pointed in the direction that there was more to the upside on this pair, but as I was biased on looking for short opportunities I failed to see them. Luckily there is such a thing as the weekend where we reflect on the trades from the last week and now it seems all very clear to me.
Lesson learned : Trade what you see, not what you want to see !
Where are we now ?
1. The 0.618 retracement of the double top has been reached, the 2618 pattern is ready to be traded.
2. We are at a level that has served as resistance several times in the recent past.
3. We reached the 0.618 retracement of the bullish bat pattern as well, but did not reach the 0.786 (which could be an indicator for a potential butterfly pattern taking price higher)
What will it bring us ?
Personally I will not jump into the trade first thing Monday morning. I will watch price action closely to check if this level holds. Then there are 2 possibilities :
4. Price action breaks and closes above 1.09 => we can expect the big resistance zone to be tested again.
or
5. Price action tests the level again and fails to break it => we can now short and look for the 0.382 and 0.618 retracement. Even a test of the lower support level is possible (100% retracement)
Have you been caught in a short bias as well, has this pair tricked you too ? Or did you manage to catch the whole move up ? Your comments are always welcome below !
Looking back at the week, I notice now that this price action was very logic for the following reasons :
1. We completed a bullish bat patter so we can expect a retracement to the upside.
2. The classical retracement levels for a bat pattern are the 0.382 and the 0.618 fibonacci levels, which we had not reached yet.
3. There was also the 2618 trade (double top, break of neck line and 0.618 retracement) where we did not reach that same 0.618 Fibonacci retracement.
All of the above pointed in the direction that there was more to the upside on this pair, but as I was biased on looking for short opportunities I failed to see them. Luckily there is such a thing as the weekend where we reflect on the trades from the last week and now it seems all very clear to me.
Lesson learned : Trade what you see, not what you want to see !
Where are we now ?
1. The 0.618 retracement of the double top has been reached, the 2618 pattern is ready to be traded.
2. We are at a level that has served as resistance several times in the recent past.
3. We reached the 0.618 retracement of the bullish bat pattern as well, but did not reach the 0.786 (which could be an indicator for a potential butterfly pattern taking price higher)
What will it bring us ?
Personally I will not jump into the trade first thing Monday morning. I will watch price action closely to check if this level holds. Then there are 2 possibilities :
4. Price action breaks and closes above 1.09 => we can expect the big resistance zone to be tested again.
or
5. Price action tests the level again and fails to break it => we can now short and look for the 0.382 and 0.618 retracement. Even a test of the lower support level is possible (100% retracement)
Have you been caught in a short bias as well, has this pair tricked you too ? Or did you manage to catch the whole move up ? Your comments are always welcome below !
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Twitter: twitter.com/NicoMuselle
► tradingview.com/u/Nico.Muselle/
Twitter: twitter.com/NicoMuselle
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