G’day Surfers – anyone got a crystal ball?
Another doji day on EUR/USD as price action crept ever nearer our major support level @ 1.3285. We were keen to find an entry long but were cognisant of a lack of liquidity due probably to many Euro countries having the day off. Despite a couple of tempting setups, we chose to stay flat as all our boxes weren’t ticked. Maintaining our discipline paid handsomely as the market poked its head up for a sniff of 1.3285 – then plummeted like a shot duck, crashing into the combined forces of Weekly & Monthly Pivots. A classic case of a resistance to support bounce which must have collected lots of stops in the process. Our Pattern Alert service put some subscribers into a free trade and 20+ pips of profit if they took their leave at first resistance. These market conditions call for a trading strategy that recognises the folly in entering a trade when there are virtually no pips on offer, a strategy that demands the market plays by the strategy’s rules – not the markets – aren’t you glad you found one?
If you had any doubt the market is indecisive, take a peak at the Daily chart. You will see dojis lined up like dollies at a sideshow. Like a scratchy CD, I can only repeat….repeat….repeat that technically we are in a Bullish Short Term Trend that produces higher highs & lows but at a very slow rate. Any sign of the Bulls getting near clear air is quickly shut down by a swift pullback. The resulting small daily ranges are proving very difficult to trade. The close proximity of the market to 1.3285 yesterday, appears to have been enough to send price action into the “sin bin” – locked between Daily Pivot & the cohorts Weekly & Monthly. Significantly, the low of yesterday’s “crash candle” took out Monday’s low, bringing shorts into today’s equation. Price is still above a very reliable 3 week old support trendline however and this is an area of interest today.
The Day Ahead
Here’s where the crystal ball comes in handy. Frankly, I have no sentiment about the direction the market will head today – just as well It’s not compulsory. Clearly price action has settled into a consolidation range between the pivots, but nearing our support trendline mentioned above. This line will be centre of attention early today and I will look to trade either a break or false break of this line, as price action dictates. Unless price action presents some highs for an intrday trendline – I see this as the Hotspot of the day. Despite 2 false breakouts, I will retain the strong resistance trendline which is Hotspot #2.
I will leave you with this thought – it’s difficult to jump a high hurdle from a standing start!!
Geoff Pyne | Certified SurfingThePips.com Trader