A-B-C-D Trade - page 82
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EUR/USD extended to regular 138.2 of 1.3338, near old and major pivot of 1.3333.
On the Gann Box, it is approaching red 1X1 line right around that support price, walking down 1/4 angle9 line.
Here is the updated Gann Box after FOMC and early Asian, on 4-hour.
After curve-fitting the first pivot onto the 18 vertical line, we received pivots for each subsequent vertical line including latest during 08:00 candle.
As mentioned, pair hugged 1/4angle9 line to intersect point with red 1X1 line, which is the 45-degree and very important in Gann theory/practice.
Next vertical line in this box is Dec 17th 20:00 GMT, line labeled 72 is also the center line.
EUR/USD breakout to downside in full force.
200-EMA at 1.3300, otherwise opportunity to finish Head and Shoulder.
100% = 1.3289
Congestion with cluster of fibs 1.3308/16, with aggressive probing.
Round number and 1-hour 200-EMA 1.3300 next support thereafter.
Bounce traders invoke BUY orders at 1.3300 for quick hit profits.
Driver for spike down on EUR/USD could be related to Moody's announcement on its review of possible downgrade of Spain.
Pair didn't initially hang around 1.3300 very long, instead opting to bounce off 100% of 1.3289, as previously noted.
Portugal also in news, for bond sale.
Chart 1 (15-Minute)
We can see divergence on indicator Fisher_Yur4ik ending with the 10:15 red histogram bar.
The first discernible green histogram bar occurred at the 10:45 bar, which is used for confirmation. Entry is opening price of next 11:00 candle, price of 1.3303. Add spread on BUY order = 1.3305.
Bottom was 1.3285, thus stop-loss just below that, say at 1.3283.
To determine take-profit level, plot fib retracement from most recent move:
High = 08:45 1.3343
Low = 10:00 1.3285
138.2 extension = 1.3365
161.8 extension = 1.3379
As we follow price action upward, we can see move stall ahead of the high, and pivot at 11:45 at 1.3339.
Here we have the option to use a new plot or at least take a look at it.
Low = 1.3285
High = 1.3339
138.2 = 1.3360
161.8 = 1,3372
The difference is that the 2nd plot is a true extension and the 1st plot was a calculation based on the overshoot of a retracement.
Another important point is the Asian High = 1.3361, which is the same as the 2nd plot's 138.2 fib. This would be the conservative take-profit target.
Trading to the Asian High, risk/reward = 22/56 pips.
Chart 2 (1-Hour)
Fib retracement tool, plot:
High = Dec 14th 1.4397
Low = Dec 15th 1.3285
38.2 = 1.3366
Doji candle at bottom 10:00 candle.
We can see the 12:00 1-hour candle close right at the 38.2 fib, as witnessed by the body of the candle.
****
Pair probed above the Asian High and made a full 100% retrace back down to area of 1.3285, and slightly below before bouncing. An ABC plot pictures this hitting the FE 127 price of 1.3296 at bottom.
EUR/USD breakout below the European Low of 1.3285.
138.2 = 1.3250
161.8 = 1.3228
Price action telling us it is pausing at the 200% extension (1.3256) from plot of:
High = 12:15 1.3366
Low = 16:15 1.3311
On the 15-min, we can see the pivots. The high was easy to spot, and the low was a blue candle.
The U.S senate just formally passed the tax bill. Now it goes to the House of Representatives.
Surely this was anticipated and priced in by the markets. Still, interesting to see if there will be further reaction to the downside for EUR/USD.
Should EUR/USD break below 1.3254 (testing now), we have 138.2 of 1.3231 as target , based on previous 38.2 pullback.