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Well, it has the 100% full extension.
Look at the absorption orders above 2770.
It should be a short term low working up a bullish rotation to a higher prices.
Once again it is a day that has re-affirmed the idea that trading the euro by looking at the dollar index is much easier than trading the Euro alone. Yesterday we have caught on the right side of the market again. But my take profit was too small that I have missed another big down leg occurred after the London close.
Now the Dollar looks extended. Moreover, it is my trading rule that don't buy the continuation trade right after a news release. Those news induced move usually don't last. Hence I am going to work with a hypo that the Dollar is going to pullback yet again during london and make another push in the New York session to break the solid resistance at 96.10.
If i take a look at the Euro chart, it tells a different story.
Euro has been trading just a couple of pips away from a significant swing low made on 9th Oct.
when price trading in such a vicinity of a price magnet, it tends to be drawn towards that magnet for the market maker to tap in the liquidity (stoploss order) pool.
Hence we would like to see a false break and flip beyond that swing low for a short term long in Euro.
The European equity has rolled over like we have mentioned yesterday and it has indeed make a bottom formation around 3180 level. Hence we are going to work with the hypothesis that the European stocks have made a major higher low and it is working on its way higher. Basically the long liquidation yesterday was a shake out being part of the big base formation.
Hence we are going to buy the gap fill pullback in European equity given that the 3180 in EuStoxx50 would not be taken out decisively.
At this moment, the gp is not filled and FESX had some difficulty in trading through 3215 value zone.
The biggest mistake this morning is that I didn't take the easy trade on the short side of European stocks.
This morning I have draw this fib on my chart, and saw Cac has been hovering in and out the entry zone for a long time. Even 20 mins after the London open, it is still in the entry zone. But what was I doing? I have zoned out already. Maybe was I distracted by the FX charts. Without taking the easy trade, I am forced to take the other side trying to pick the bottom of the down move.
This has resulted in a terrible performance this morning. In fact trading is not hard. It should be easy. There is so many easy trades everyday, I should just grab those easy trades and leave the hard ones for those who has bigger pocket and better skills.
1. Dollar index had a massive failure at the old resistance of 96.10 last Friday, hence increased the probability of developing a running flat formation into the second half of the week, which is saying that it is going to run the stops behind the 95.00 round number as the next step.
This corrective pattern should ultimately resolve to the upside some time later.
Notice that there is many stop run over the major swing points in the dollar index, making it the most prevalent with the running flat formation.
2. The Pound chart just could not be messier recently.
Late last Friday, there was a big spike up. However, that could well be part of the corrective structure which is going to resolve to the down side making a major short term low then work its way higher. This is one of the possibility. But the scenarios are going to change according to the political headlines.
