Good morning all,
This morning we are looking at DXY & EURUSD, lets see what our traders think
- Following the release of Fed minutes, we saw buyers come back in and price started consolidating with no real momentum either way for the rest of the week.
- Planning ahead – the assumption we are going by is further USD strength based mainly on:
- USD seasonal strength lasts till early March.
- Price has broken the previous daily high and currently showing typical Phase 2 behaviour.
- There is room for price to go to the upper weekly channel TL.
- It is not possible to pinpoint exactly when USD bulls will make a break for it and for Daily Phase 1 start again. But we can be prepared for it by identifying levels and possible price reaction from these levels.
- Dropping down to the 4HR chart:
- Scenario A – Buyers start building momentum, price clean breaks and retests the level.
- Scenario B – Price drops down and we see a strong, immediate reaction from buyers creating momentum and price shooting up, resulting in a double bottom reversal pattern.
- Scenario C – Price drops further down and we see an even stronger, quicker reaction from buyers resulting in larger momentum and price exploding to the upside. Following a move like this, we see a large low test candle with a long wick on the daily chart.
- The three daily high test candles look ominous for euro bulls and one would think, it is just a matter of time before price rolls over.
- Dropping down to the 4HR, we can clearly see the current weak structure.
- Just like USD, levels and potential price reactions can be marked up to plan ahead and these will be the opposite direction to the dollar.