By: Doug Rosen
Normally, I would look at this pair and think it was bearish. But even in a bullish market bearish conditions will always exist. In uptrend's we will have retracements to the downside.
A weekly chart could be in an uptrend, yet a fib retracement on a weekly may very well appear as a sustainable down trend that could last for days, if not, weeks on a 4 hour chart. Same goes with daily retracements too.
Remember, the market is fractal in nature and each piece is a self similar part of a bigger piece. This is why I do my analysis over multiple time frames and start out with he weekly and work my way down to the hourly and even the 15 minute. Like they always say in an uptrend buy on the dips and in a down trend sell on the rally's. OK, enough of this lesson, lets continue onward.
As I was saying earlier, I normally would think this pair was bearish because price fell then retraced back up, was basically a daily fib overlapped with a weekly 144, 13 and 55 ema's, but, because I carefully analyzed the USD/CHF I saw that as bearish, so if the USD/CHF is bearish, then the EUR/USD must be bullish. No, on the weekly chart the stochastics is in the oversold zone crossing up.
On the daily chart we are looking very bullish, we have had shorter term ema's cross above longer term ema's, this is indicative of bullish price action, price is riding the 5 ema, the upper Bollinger band is open and pointing up and price looks like it wants to break out of a trend line. We are definitely in a fight zone however. We are at a 50.0 fib of the recent move down, we are against the 55 ema, trend line and stochastics is in the overbought zone.
Price has also gapped away from the 5 ema so that usually means that price could fall back a bit or slow down until the 5 catches up. So, we may have a fight between bulls and bears at this level we are in. Price is also up against the monthly R2 which adds to the mix, but at the same time, on the 4 hour chart price has been gracefully riding the 13 ema up witht he 21 ema standing in when the 13 is busted.
Moving over to the 1 hour price has been riding the 5 ema for the last few hours and the upper Bollinger band is wide open and pointing north. The weekly M5 is at 1.3838 which is about 50 pips away at the time I am writing this analysis.
Basically, it price can go either way today, we just need to watch price action. Wait for price to break 1.3840 before taking a long on this pair but of course, wait for a pullback down to a 38.2 fib level maybe down to 1.3800 then green before entering a long position for this pair.