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EURUSD Daily Forex Analysis: First Downside Target Hit, More Targets Identified

Blog & Emails

UPDATE: You've got to love the Fed. Surprise Disocunt Rate increase hits the EURUSD , dragging it lower. Now that the close below 1.3600 is behind us, we can start to look for trade opportunities to the south. I'll look for pull backs to to 20 EMA or tomorrow's daily pivot. Those selling now may verywell grab profit if when it gets a little overdone. Just niticed a great pull back spot for a short 1.3550

Today’s analysis might get a little complicated so I decided to break it into a few parts label A through C. Lets cover last night action first though. Right before I walked away from my computer for a few minutes I created an update that said the EURUSD was looking very heave and that 1.3535/50 was most likely to print last night. Within thirty minutes the pair dropped twenty five points then stabilized until later in the Asian session. 1.3535 didn't quite get printed but a low of 1.3540 did. I had mentioned that 1.3550 should be the target for a short trade. Hopefully a few of you were able to take advantage of the information. Of course always do your own evaluation and trade based on what YOU think is going to happen.

A- First of all this line represents a short term down trend that should be tested in the coming days. The only reason it wouldn't is that is already validated and the pair will break lower. However, it also serves as a second point. There seems to be an H&S formation building with today’s price action. Now I say this with caution because the daily candle still has several hours to go and it is entirely possible that the day could end up below 1.3535, invalidating the H&S formation. Now, if that formation holds, the neck line for that formation will be the A line discussed above. The interesting thing about that is that the target for that move would be in the 1.4000/50 area, Line C.

B1 and B2- B1 represents the lower lows seen on the 5th and 12th of this month. Line B2 represents the converging, or rising RSI(14) that is not supporting the new lows by printing a new low or at least matching the low from the spike down on the 5th. This is a definite sign of a possible reversal in the making. When I say reversal I am not talking about the EURUSD back at 1.5200. I simply mean it may be a beginning of a Retracement to the 1.4000/50 area. I mentioned this swing failure a few days ago and price action sure hasn't set any new lows since. The initial push higher on 02/16 was immediately reversed, but readers were expecting that as well. At the least expect several days of sideways action.

C- Not only is this line the target for the possible H&S formation mentioned above, but it is also the 50% retracement line of the move from 1/13 highs to last week’s new yearly lows on 2/12.

I'll be looking to buy a break of above 1.3650 for a target along line A. This is an extremely short term trade and I won’t risk much. If that long hits and closes, then I will start looking for more long positions in support of the H&S trade mentioned above. If 1.3550 gets closed below then I'll be looking for a trade to the 1.3485 area and lower if momentum can hold. That target may move a bit depending on where S3 ends up at 3 PM. Remember that on the 1.3550 break I am favoring a move to 1.3200 at least. I mentioned this target in yesterday's email and you can reread it for further explanation on that target.

A lot of this depends on the close for today. A close back above the 1.3600 mark gives the top side a little momentum, but to truly move to the top side, I have stated that 1.3650 MUST give way to release some of the down ward pressure. A close below 1.3600 suggests that buyers are absent at these price levels and that more losses may need to happen before they reenter the market.