Technical Analysis December 18th: The euro retraces

18 December, 2017 - 06:35AM

EURUSD, Daily timeframe

Bias: Pair in Uptrend

On Friday, the pair dropped 26 pips. This was the second day of negative price action. Clearly, the pair is pulling back from the resistance level at 1.1900. The developments we’re closely monitoring are:

Scenario 1:

The pair could bounce from the support area at 1.1700. A valid rejection would be marked by a bullish candle of at least 80-90 pips from that area. This is a scenario observing the already established direction of the Uptrend. Targets above are: 1.1900 and 1.2065.

Scenario 2:

Price could drop further. This potential price action could signal a deeper retracement. The support we should be looking out for is located at 1.1500. This level could offer opportunities to do business on the long side. See targets in Scenario 1. A mandatory element is a trigger bullish candle pushing away from that specific level.

Scenario 3:

If bears continue to hold tight of price action and the euro plunges below 1.1500, we shouldn’t fight the market flow. Next level of support is located at 1.1300. No longs in this case.

 

Gold

Bias: Neutral

The precious metal had a mildly positive week. 72 pips in positive direction is hardly indicative of bullishness. The best approach is to let price action develop. This will save us from rushing into the market. Let the market play itself out. Once price reaches our outlined levels where we’d be willing to do business, then we’d be taking the professional approach of trading. Preparation before execution of trades is key to the end result.

Scenario 1:

Once price closes above 1270.00, we’d be in a situation where the metal has formed a bullish engulfment covering the negative price action from the entire previous week. Targets above would be 1300.00 and 1350.00.

Scenario 2:

A Retest is possible. If price heads back toward 1240.00, this should come as no surprise. Historically, price action tests immediate levels of support prior to shooting up/or collapsing (depending on the market we’re in). A bullish rejection candle from that level would offer a chance to enter on the long side from better (i.e. weaker prices).

Scenario 3:

If price collapses and closes below the immediate support at 1240.00, we could see more weakness coming in. Next support level is located at 1204.00. No longs in this development.
Bitcoin

Bias: Uptrend, 4-Hour timeframe

The crypto currency continues to gather more interest from traders with its ever increasing prices. The trend is clearly bullish. This being said we’d be looking to go long only. Our strategy is to ride the trend and look for appropriate places where price could retrace. And, we’d be looking to join the trend from better prices on the way up. The scenarios and levels on our watch list are:

Scenario 1:

Bitcoin hit the impressive price of $ 20, 000 per coin. For crypto currencies, we are switching to the 4-hour timeframes. This is where, the levels of support and resistance will be positioned.

An immediate support is located at 17817 level. If price retraces to that area, we should await a bullish rejection candle on the 1-hour or 4-hour timeframe. This would be the trigger signal to go long. Targets above are 19000, 19500, 20, 000 and 20500.

Scenario 2:

Price could make a deeper retracement toward the following support levels: 16437, 16000, and 15500. If you see a strong 4-hour candle bouncing from those levels, this could offer a chance to go in.

Scenario 3:

If a daily candle closes below the support at 15500, this could mean more weakness. Bear in mind the significant levels of volatility in the currency. A drop could be sharp and of significant magnitude. Always, always place a stop loss on your trades. Always.

 

Ethereum

Bias: Uptrend, 4-Hour timeframe

Ethereum is at an all time high at $752 by aggressively gaining 20% in 24 hours. The established price action is clearly a bull trend so we’d be looking for spots to go with the trend. The scenarios we’re monitoring are:

Scenario 1:

The 750 high could easily turn into a support level once the crypto currency moves up. Mind you that we’re on the 4-hour timeframe due to the speed with which the market is moving. This will allow more potential precision to outlining levels of support, resistance and possible entry points. If price tests 750, targets above are 800, 850 and 900. We need a bullish rejection candle on the 4-hour timeframe. This would be the signal to go long. We do that only after the 4 hour candle has closed not prior.

Scenario 2:

Price could retrace to test the following support levels: 600 support area and the support at 503. These could offer better prices to trade off from. That would be in the situation where we’re looking to trade the continuation of the uptrend after price shows a bullish pattern candle formation. That second part is obligatory. Targets are the levels that have recently been reached, namely 750.

Scenario 3:

If the currency closes the day below the support at $503, this would be the time to stay put. We’d have to await more price action. No entries in this scenario. Levels of support below are 400 and 300.

 

Wishing you happy and successful trading!

 

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