click to maximize
Ever since the Euro broke out of its downtrend from November in January after reversing off lows of 12627 and trading through the first trading day of the year range of 13020-13085, this range has turned into support. This is the market showing us that the breakdown in January has a head fake and the market is attempting to reverse its momentum as it climbed back above that first trading day of the year range. Since then, the Euro squeezed into testing resistance from December however was unable to continue the push which was followed by a retest of the 13020-13085 support. This led to another bounce that failed at the now new resistance from February levels, which was followed by another breakdown to retest its support level. This failure at the February levels turned into a right shoulder as the market came down to test its neckline as many shorts were looking for a break to confirm a head/shoulders formation. During the month of April the Euro pressed against this neckline and even clipped it to put in lows of 13000 however held its 12975 lows from February and reversed back higher. This led to a major consolidation and struggle to hold this neckline as the Euro has fought with its back against the wall trying to chip away at sellers and get the market out of this downward pressure. This is needed for the market to try and squeeze higher to have shorts in as fuel for an upside rally. Currently the Euro has worked through its 13200 resistance and is testing its next major resistance from the failed March highs which also meets with a downward resistance from the Feb-Mar highs connected. Buyers who defended the 13020-13085 support level have opportunity again to lock in profits and leave runners to let the market work itself out to try and squeeze through this resistance. A move past the March highs squeezes out the shorts who were looking for the head/shoulder breakdown and targets the February highs. Moving past this February high squeezes out the remaining shorts giving fuel for the next leg up to try and retrace into 138 from where the market broke down from in October. This 138 is the ultimate resistance in Euro off the 14241 highs and sellers should be looking at this level to defend. As stated before the Euro is in short covering mode ever since it climbed above the Jan 3rd levels and support is seen down to 12890. A break below 13000 would shake out weak bulls however taking out the year lows of 12627 is needed to put the ball back in the bears hands.
read more...
click to maximize
Since the US dollars island bottom in October and failed breakdown, the market completed its target up to 22.4 in the ETF "UUP" or 8100 in the futures. We saw the dollar make a last attempt at a new high to 82045 and 2285 in the ETF before the uptrend from these lows were taken out. Since then the market fell to test where it broke out from being the 7800 neckline in the future and 2190 in the ETF. This is major support as this was the neckline of the November breakout and has been heavily defended. In March the dollar was squeezed off this level to shake out weak shorts and retest its year highs. This retest failed in turn creating a "head" for a head/shoulder formation. This was followed by another breakdown into testing the February lows which was once again heavily defended, leading the market to retest where it broke down from being the March highs. This retest came in April as the market failed to push through them in turn creating a right shoulder and has since fallen back into its neckline from the Feb-March lows. This neckline is now being broken as the pressure is there to break this market down since the year highs were tested and failed and the test of these year highs being the March levels also failed in turn creating that right shoulder for the head/shoulder formation. This range now gives another test to chip away at this major 7800/2190 support level that has been heavily defended and should be able to break below now giving way to target the October lows and fill its gap to complete this head/shoulder formation. A move past the April highs followed by the March highs is needed to break the dollars bearish momentum and retest the year highs. When it comes to trading this, advanced traders look to be in the head of the head/shoulder or the right shoulder which is a test of that head so as the market comes into its neckline, profits are taken and runners are left to see if the market does indeed breakdown. One has to be on top of these levels and "ahead" of the street to be profitable, subscribe to our daily newsletter as we provide daily Euro and USD analysis and teach techniques as to how to be "in" at these levels and ahead of the street.