Forex Education

EUR/USD Shows First Sign of Reversal

• Daily - EUR/USD continued to rally and proved that our previous areas of anticipation were simply continuation patterns.
• Now we are at the 78.6% retracement (refer to chart - slightly broken but immediately rejected). This corresponds to the projection of gartley, which is now complete. 
• Candlestick action is as follows: Spinning top at resistance, followed by a strong bullish candle, which now looks like an exhaustion move, because the next candle is a bearish one with equal aggression.
• 4H - We look at a lower time frame to analyze more detailed price action. We see that the market had been accelerating, reflected by sharper upsloping support lines.
• Today's action was bearish, and we may start anticipating a topping patter.
• One such scenario is a 3-push-up, which seems less likely after today's strong bearish move.
• Another scenario is a head and shoulder, which may establish its neckline at its current level, or even lower. 
• In conclusion, it still seems too early for a reveral, but warrants anticipation of a topping pattern and than a break of short-term supports. 

• Daily: Bearish engulfing fitting western standard of outside bar. (The second candlestick has a larger range as well as larger body than the first).
• 4H the immediate action is more bearish than the EUR/USD, but established uptrend has been stronger than the EUR/USD.
• At the moment, the decline has brought price to support. We need to monitor this support to see if it breaks, than to see if there is a kickback.

• Daily: We see that price action is narrowing, reflecting indecision.
• 4H: We see a triangle in the more detailed time frame representing this period of indecision. 
• One scenario is that the price action will decline to the bottom of the pattern. This may be an entry point playing within the triangle.
• Another scenario is that the price action will the triangle on top, after which we should check for a kickback to see if the break implies sustainable bullish strength. 

• Daily: Resembles action on EUR/USD.
• Very apparent wave count. Potential wave 4 coming up, which according to the Elliott Wave Principles, should be a different form than wave 2. Since wave 2 was a choppy retracement in ABCDE form, wave 4 may be a simpler retracement pattern.
• Stochastic is also showing a slight bullish divergence.

USD/CAD: Strong Bounce from 78.6%

• Daily - Very strong bounce. Sharp reversal signal, with a hammer followed by strong bearish (exhaustion?) candle, followed by an engulfing outside bar.
• In 4H, we see that the more recent short-term resistance has been broken. Again, a break as such, should warrant anticipation of a kick back to confirm strength in breakout direction.

EUR/GBP Reversal Contained in Downtrend

• Daily: Market stopped at 0.8600, sooner than our projection of 0.8500 or lower.
• However, the reversal action is still contained under downsloping resistance. Therefore, the pair remains bearish, until that resistance can be broken.
• The screenshot was taken the next day, and price action indeed breaks that resistance, so it may be prudent to watch for a kickback.

EUR/JPY  

• Daily - Bounce from resistance, also with engulfing outside bar.
• If a decline ensues, first may be 129.00-129.50 (78.6% retracement of current rally leg).