The King is/n’t/ dead /yet/, long live the King

NOTE: Please bear in mind none of this is investment advice. This purely reflects my opinion and my analysis of market price action in the blow mentioned asset classes.

It has been a frustrating month for being long USD, however, ever since the ECB meeting and the absolutely bonkers stophunt in the Sterling I have only been looking at one thing, which is being long the USD.

It has truly been annoying, however. My initial EURUSD short from 1.249 got eventually stopped out for a Net /unlevered/ gain of around 0.91%. What was even more frustrating was the fact that it front-ran the Short-levels I mentioned was looking at by 20 pips. As I wrote in Buy fear sell greed:

EURUSD has been a bit more stubborn and at this point is lagging behind other USD crosses. I don’t see any real support until 1.205 at least and continue to patiently wait for more downside while we remain under 1.265, but I have closed 50% of my initial EURUSD position and moved my stops @ BE. Generally a move above 1.241 technically should signify new highs. Thus on a move above 1.25 again I will be looking to re-short @ ~ 1.257 with my risk range for flipping being between 1.265 and 1.27.

Unfortunately, we didn’t get to my entry order and the rejection came from around 1.255. Which puts me in a peculiar situation.

My Sterling position has survived and my remaining 30% of the initial position remains, however, I didn’t have the guts to re-enter the other 70% at 1.41. You can view the non day-trading positions I take on my portfolio page Portofolio.

Still the double top pattern that appears to be forming could remedy some of my frustration. I shared this chart yesterday:

And since then we have started an attempt on breaking the bottom. This is technically a pretty darn good Double Top that I initially started entertaining as a serious possibility on break of 1.233. Since then we broke a short-term TL and received a KYM setup that has taken us lower.

Should the 1.22 level break things will look like an almost guaranteed move towards 1.21 . There in lies TL + prior resistance support and that is where I suspect the big possible “failure” of the double bottom setup can come, so for anyone short EURUSD, make sure to take partial profits there and lock in some pips.

Break under that larger TL and resistance @ 1.21 is where things start to get interesting for a swing trade to 1.185 & 1.174.

Getting into a new position here is a risky endevour as the double top pattern still isn’t confirmed, thus any attempt at a break-out trade here needs to be with a very well balanced risk profile and a well considered stop. The classical TA way to trade a double top formation is to wait for a break of the bottom and if price moves 10% under that of the overall range /350 pips 1.221 to 1.2555/, which in this case is a 35-40 pip move, on a retest of the broken bottom to enter with a tight-ish stop.

The Double Top targets extend to 1.185, a level I have spoken I want to see traded ever since we got to 1.23.

My stance is clear, I am bullish USD especially vs the EUR for 1.21 immediately and 1.173 on a larger scale. However, I am waiting for signals of confirmation that the pattern is true. Our first signals have come in, now all that remains is for 1.22 to break.

The king maybe isn’t dead, yet.

Invalidation of this larger view comes on a move above 1.243.

 

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