EUR/USD Daily Update, Wed 07, December 2011
Good morning,
so, guys, in two words - this is probably huge trap for bears. Now let's turn to details.
First, on daily time frame we can see, that market has closed above the pivot and breaks our expectation about bearish dynamic pressure, since we see some signs of bullish price action. It tells us that move to 1.3620-1.3670 becomes more probable that even yesterday.
Trend holds bullish.
But most important stuff holds on 4 hour and hourly chart.
4-hour trend is also bullish. Yesterday move down has been held at 0.618 support and then market has moved above pivot, shifted trend. This is bullish price action, especially holding of 0.618 support level. WE need to see nice breakout of low at 1.3333 to speak again about bearish environment.
Now we pass to most intriquing things - hourly time frame.
Trend is bullish. We see nice W&R of previous lows and MACD Divergence. But these are minor things.
Major things are:
remember our AB-CD downside pattern. We've said that market just has hit 0.618 target and retracement should not be deep - reaching of 1.3420 K-resistance as maximum. Initially this was really so. But take a look what has happened next -
Market was not able to continue move down. Instead of that it has reversed and now is forming smaller upward AB-CD, but take a look the way how it is forming it! Reaching of 0.618 target and retesting of K-resistance without any respect.
Second, we can see absolutely unnatural price action now as a bearish wedge. But don't be decieved by it. Wedges are exhausted patterns and very often agrees with MACD divergences, but here we see absolutely curious parallel lines of MACD and strong upward momentum.
That's being said, I probably treat overall current action as strong "bear trap" and expect explosive move to the upside. This could be reall Doom and Gloom, so be careful with stops. Better to use smaller lot and farer stops in nearest time.
