EUR/USD Daily Update, Wed 28, September 2011
Hi there,
although major question is still open - does current move is a "deeper" retracement to 1.41 or just small pullback, more and more bullish signs are appeared on the market. What are they?
1. Daily trend has turned bullish;
2. Market has closed above pivot for the first time since August;
3. Market shows bullish MACD divergence right at weekly Agreement support;
4. Market is forming bullish wedge and has formed already 1.27 Butterfly Buy.
That's impressive patterns, right? So, what the possible target? This is 1.41 level - 1.27 target of Butterfly and 0.618 resistance. But nearest level is 1.3814-1.3844 - daily overbought and Fib resistance.
So, what we can do today?
First, yesterday we've said that market will probably reach 1.3574-1.3625, since this is solid resistance and respect it. That has happened. But today, to enter either short or long you need more than just a strong area. you need some solid patterns that give you sufficient confidence to pull the trigger.
So, if you're bearish, you need:
Wedge upward fake breakout. Market could reach Agreement at 1.3702-1.3708 and then return right back inside the wedge body. This could not neccesary lead to deep move down, but at least you will be safe and will not loose money, since market should show some deeper move in this case.
Second, it will be better if market will combine it with Butterfly Sell pattern on hourly chart. The 1.27 target of it stands precisely at the same 1.37 area.
If you're bullish -
look at hourly chart. Trend is bearish. this is tells us that market probably could show deeper retracement. Your level to watch is 1.3474 Fib support. Be sure that this level will hold and 4-hour trend will hold that retracement and remain bullish. This will be classical hint on potential upward breakout of the wedge.
That's all. Watch for clear confirmation. Market is very unstable and sensitive to news currently.