Friday, May 27, 2011
Trend for 27th of May 2011
Euro and pound were the champions of the day. They strengthened against all major currencies. If you looked at eur/usd pair you will see how well the principle of ‘buy on dips’ worked for the pair in these couple of days. One not very usual thing was that the pair advanced upwards during Asian sessions and during European sessions saw retracements. However, you could look for 123 patterns on 5-15 minute charts and enter back into a short term trend in the pair. The pair is approaching 1.4340 level and if you looked at 4 hour chart you would see that it is a very serious resistance now. Price was twice rejected there. I would not buy an immediate breakout of the level but wait for the pair to reach it, retrace a little and after the second attempt of it to go up I would buy a breakout. Why? Because I do not trust breakouts that happen after the pair has advanced a lot. It is usually tired by the time it reaches a breakout level. It needs some rest before continuing its ascend.
Pound was probably stronger than Euro today. Gbp/usd made a third consecutive day up after breaking 200 sma on 1 hour chart on the 25th of May. You can see how it met resistance when the pair approached it the day before (on the 24th of May). Retracements were pretty small in the pair as it was going up, but you could have jumped on the trade during Europeans session on the 26th of May (yesterday). The pair is at resistance now and I am not intending to do anything with it until I see some possible signs of reversal or continuation of this short term bullish rally.
I also wanted to show you a bearish technical pattern in usd/cad pair. Looking at daily chart you can see a number of small candles and inability of price to go through 0.9800 level. And if you scrolled backwards the chart you would see how the level acted as an important support and resistance on a number of occasions. At the moment it is still support, but if the pair goes down, it will definitely gain bearish momentum. So, just have it in mind when you prepare for the next trading week. It is better to be ready in advance than to make hasty reactionary decisions when markets start moving.
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