Good day all,
The past week has been a roller coaster ride for me and my trading. Generally, I am a bear on the USDSGD pair, and also a short-term bull on EURUSD. Sadly, I was whipsawed a couple of times the past two weeks. So right now, while markets are closed, I will look at the chart of the EUR/USD pair and see what I can come up with.
First up, let us establish the long-term trend of the EURUSD. From 2011, EURUSD has been in a clear downtrend, as depicted by the large downward parallel channel. After making recent lows at around 1.2625, EURUSD rallied 600 pips to make a recent high at 1.3320. The recent rally left two chart patterns in its wake – a confirmed inverted head and shoulders, and a bull flag.
In both charts, you will see the inverted head and shoulders. A quick breakout was followed by a pullback down to the close on Friday – approximately 1.3190. Ideally, I am hoping for upside before getting in, even though the inverted head and shoulders is confirmed and so a chartist like me should get in straightaway. Fundamentally, I am seeing how the news is coming out of the chart. The long green candle signifying breakout day from the inverted head and shoulders – and the bull flag – came when news of Greece coming very close to reaching an agreement for aid came out. The next few days, EURUSD halted as Greece could not find support from within, or that austherity measures to be implemented seemed too harsh. EURUSD decided to slide further down to below 1.3200. Right now, I must say EURUSD is hanging on to important support. If we get much better news from Europe again, I am sure EURUSD will continue on to higher levels, and prove the bull flag and inverted head and shoulders to be true. Conversely, if bad news emerges, I will be ready to short EURUSD as it continues trading down in the large downward parallel channel.
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