By: Doug Rosen
Yesterday the EUR/USD tanked. This of course had nothing to do with the USD but everything to do with the EUR. I have mentioned this in my analysis on the other pairs, regarding the Eurozone Debt Crisis. Of course, as with the USD/CHF, an entry position into this move was technically possible and when I wrote my analysis yesterday I was not even thinking of the Eurozone Debt Crisis. You see, I am strictly a technical trader. That's not to say that Fundamentals are not important, they are, they drive the market and the technical's just put the trader into a position. Of course, news events cause price movement and this movement is reflected on the technical charts. So basically, there were plenty of technical reasons to enter a EUR/USD short yesterday and you could have done this totally unaware of Euro events.
What I really love about this pair today is that on the weekly time frame price is now sitting on a support line so all I have to do is what for price to either break below it or to bounce off of it. Of course, this is a weekly chart and it could take some time for a move to play out.
On the daily time frame price has broken most fib levels except for the 78.6 final fib at 1.3380 and since this is a very popular fib for entering longs since you don't have to put your stop loss too much further away I think we can expect a reaction at this area and it does coincide with the areas I just mentioned when discussing the weekly time frame.
Of course, the 78.6 fib will not be a reversal, it will be a bounce offering a short opportunity, or you can wait for price to break it then retrace back to it which would be the conservative option. A pullback on the 4 hour is imminent for a couple reasons. Price is touching the lower Bollinger band and it is gapped away from the 5 ema.
A move up towards the 5 ema is what price will need to continue downward. At the time I am writing my analysis price is touching the weekly M1 pivot at 1.3430. The next daily pivot point below current price action is the daily S2 at 1.3413 Wait for price to hit support zone to provide the pullback you need to enter a short.
