EUR/USD - Bearish But In a Bullish Fib Zone

By: Doug Rosen

This pair is in a very iffy area today. I will explain why in just a moment. First of all, price did do what it was supposed to do, what I said it would do in yesterday's session. At this moment price is centered on the weekly 233 ema and on the very edge of the lower Bollinger Band. This can be either Bearish or Bullish.



Now, as I have said already, I am long term bearish on this pair in the technical sense and when I say technical I mean technical. I am strictly a technical trader and even though I do watch for news reports strictly to know whether or not to enter a trade or take profit on a trade, my bias is based on raw technical's. I have always believed that news and fundamentals will be reflected on the charts so i just concentrate on the charts and try to catch the trends in the most likely levels. So, as I look at my charts, there is no reason for me to think anything other than bearish, however, as bearish as the market may be a daily or 4 hour candle may still be bullish. So why sit on our hands and watch a counter trend 100 pip trade go by? So even in a bearish market I may very well still look for reasons to take longs and in a bullish market I may very well look for reasons to short.



When looking at a daily chart that is bearish there will still be retracements and on a 15 minute chart that may very well be a sustainable uptrend for that day, or even a couple days. So today we find ourselves sitting on a 233 ema than could be busted or bounced off of. I also want to point out that we are in a bullish fib zone between the 38.2 and 50.0 Technically, we are in a zone where bulls could emerge.

On a weekly chart this must be acknowledged since the big money such as hedge funds observe longer term charts. They regard the weekly as a retail trader may regard the 4 hour. On the daily the candle is red at the moment, however, it is not riding or up against any ema's, fib levels or Bollinger Bands. Price is in a bullish fib zone but not against any surface on the daily. Possibly the weekly 233 ema could hold price steady until the daily 5 ema catches up and pushes the daily candle downward.



So now I need to move over to the 4 hour chart. Here I see that price is up against the monthly S3 the lowest possible pivot level yet it has been staying in this area for days so now traders are very complacent with this level. The 4 hour 5 ema is closing down on price and the lower Bollinger Band is open and pointing down. I think this 5 ema wants to force price through the S3 causing a breakout of sorts.

Down to the 1 hour we continue to ride the 5 ema down. We are 60 Pips above the weekly S1. Price has already pierced the daily S1 and the 15 minute 5 ema is pressing down on price. A break below 1.3600 breaks the monthly S3, the daily S1 and breaks a psychological level. Yesterdays low is 1.3585 so expect a rumble in that area. This area will also be seen as a double bottom so be careful. You may get a scalp long off that level as a dead cat bounce (no pun intended). Price will probably come back up to 1.3600 - 1.3615 then look for some red then take another short and aim for 1.3540

See how this market analysis translated into profitable trades here.