EUR/USD 4hr Chart Analysis
EUR/USD Last Week
Last week I mentioned that EUR/USD might range between the 1.3020-1.3045 support area and the 1.3100-1.3125 resistance area. Well it turns out that EUR/USD did exactly that for the majority of the week. This tight range was perfect for reversal trades and I managed to snag two trades on the 1hr chart, one worth 50 pips and the other 40 pips. One of these trades was recorded as a live trade video, check it out if you haven’t already.
On the chart below you can see the two successful long reversal trades and what looks like a failed short trade. Last week the red highlighted resistance area was at 1.3100-1.3120, mid way through the week it was moved to its current level at 1.3115-1.3135. This means that the failed short trade below was not actually a trade. At the time the indecision and reversal formed too far inside the resistance area so it was not entered. If you refer to last weeks analysis you will see the former placement of this resistance area.
On Thursday EUR/USD finally broke out of it’s range and pushed up to the next resistance area at 1.3185-1.3205. Technically I had my profit for the week as I only target 100 pips and 90 pips was close enough but the bounce from this resistance area was too good to pass up.
EUR/USD pushed up to my resistance area, resistance = sellers so I knew there were sellers here looking to drive price down. My first indication that the sellers were winning was the large upper wick on the first Bull candle to break through the area. The large wick indicates that the Bulls tried to push through but the Bears took control and pushed them back.
The next indication was the small indecision candle, this candle did not indicate that the Bulls or Bears had control, it simply indicated indecision and a tight struggle.
The third and final indication of the reversal was the bearish candle breaking the low of the previous candle. By this point it was clear that the Bulls were done and the Bears were going to take control. The entry was at 1.3170 with a stop loss of 30 pips and a initial target of 50 pips.
Within eight hours the Bears went on a joy ride and EUR/USD spiraled down. This trade ended up making me 80 pips.
Going Long on EUR/USD
Just like last week there is heavy resistance on EUR/USD. The first resistance is at 1.3115-1.3135 which has migrated up slightly from 1.3100-1.3125 last week. The next resistance is a minor level at 1.3155 which is followed by another resistance area at 1.3185-1.3205.
The current resistance means that taking long trades early in the week could be risky. Price may push up but Sellers may come in to the market at any time and turn the bullish move around. In my opinion if you are going long early in the week you should aim for small and quick targets.
Going Short on EUR/USD
EUR/USD faces heavy support this week the first area is between 1.3040-1.3060, this has migrated up slightly from 1.3020-1.3050 last week. This resistance area held extremely well last week and has held well in the past. The next support is at the 1.3000 psychological level which doubles as the one month low.
I would not enter short on EUR/USD until the price breaks the 1.3000 psychological level.
After the 1.3000 the next support area is at 1.2970-1.2945 which starts only 30 pips from the 1.3000.
Ranging on EUR/USD
As last week ranging between the 1.3115-1.3135 resistance and the 1.3040-1.3060 support is possible. If this happens we may see some great reversal trade opportunities so keep an eye out.
Summary
This week could be very similar to last week and we could see a lot of ranging. However, the Bears did make a significant move towards the end of last week so they could continue that move this week. If the Bears push down at the start of the week you probably should not short until the break of the 1.3000 level. If the Bulls push up they face a lot of resistance starting at the 1.3115-1.3135. The resistance might make it tough for the Bulls to gain much ground.
Given the challenge the Bulls and Bears face a range might be possible, if the price ranges watch out for reversal trades.