Published On: Wed, Mar 1st, 2017

Two ways to play the last dollar move – EURUSD triggers and targets

InstaForex


USD Index

The dollar rally is in its final phase as we look to complete the AB=CD corrective formation.

Prime resistance levels are:

102.00 – this is close to 61.8% pullback and an intraday AB=CD inside wave

102.33 – one hour 261.8% extension to complete the CD leg

102.83 – the 78.6% pullback level making a bearish Gartley formation. 

With this in mind there are two ways to play the move: 

1. The immediate bias and intraday play is to buy dollar dips up to resistance levels (but don’t outstay your welcome).

2. The medium-term play, and the one I prefer, is to start fading dollar short positions at various levels. 

USD Index – Six hours (corrective formation) 

Source: Saxo Bank

Remember, we are only looking at completing the right shoulder of the bearish head and shoulders formation.  

USD Index Daily (bearish head and shoulders)

Source: Saxo Bank 

Reflecting this back on EURUSD

Monthly – mixed for the last 24 months. The bullish engulfing pattern in January gives a mild upward bias. 

Source: Saxo Bank

Weekly – Elliott wave theorists would argue that the last move higher was a mere fourth correction with the next move lower being towards 0.9771 and breaking the much-anticipated 1.0000 (parity) level. Shorter time frames and the dollar would say this is not the case.

Source: Saxo Bank

Daily – moving lower toward the channel base and possible right shoulder at 1.0446 (of a reverse head and shoulders formation).

Source: Saxo Bank

Intraday (six-hours) – the Fibonacci confluence area at 1.0440 and makes a bullish Gartley formation. Watch the RSI (relative strength index) for bullish divergence (chart makes a lower low while the RSI makes a higher low).
  

Source: Saxo Bank

Conclusion

There are two ways to play this move, intraday and medium to long term. 

Management and risk description

Parameters intraday

Entry: Sell at 1.0585

Stop: 1.0625

Target: 1.0460

Time horizon: 1-2 days

=======================================================================

Parameters – medium term 

A move through the neckline at 1.0800 (stop to entry) and the measured move target is 1.1300


Entry: Buy at 1.0460-40 area


Stop: 1.0390


Target: 1.0460


Time horizon:
1-2 days



— Edited by Jack Davies

Non-independent investment research disclaimer applies. Read more
A compiled overview of Trade Views provided on TradingFloor.com is found here

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