Recommendation: SHORT-TERM BUY/SELL SHORT AFTER RALLY
Current Trend: Short-term down. Med-term sideways. Long-term sideways to up.
Strategy: Buy at current levels, then sell short after a rally to 1.1855-1.1885.
(Daily)
Chart Setup: The euro has given a bullish reversal candle from line 4 on Friday, which should start a short-term rally. There is also a small falling wedge (blue lines) in place now, which is a bullish pattern. So, I'm looking for a minor rally, and then another leg down to its downside target from a head and shoulders (H/Sh) top, to 1.1595.
- Its short-term Stochastic is giving a positive divergence from its oversold region, warning of a rally to come.
Strategy Details: Go long at current levels. (A more conservative buy signal is a close above the wedge, blue line of 1.1755).
- Thereafter sell short a reversal day/candle down from the 1.1855-1.1885 zone.
Target: A short-term rally to 1.1855, based on the small wedge. There is resistance above there at 1.1885. Thereafter, down its downside target of 1.1595, based on the H/Sh.
- One concern here med-term is the euro might be forming a med-term H/Sh top, with the rally to come forming its right shoulder. This is something well be monitoring closely; because if this is the case, then the euro will fall a lot further over the med-term (potentially to 1.1300).
Stop-loss: For buying, stop is a close below 1.1650. Then use a breaking of its prior one-day low from 1.1830. For shorting after the rally, we’ll update with a stop, but offhand a close above 1.1955 initially.
To subscribe to more research by Colin please go to his website www.themarket.co.za
COPYRIGHT:
THIS NEWSLETTER IS TO BE READ ONLY BY CLIENTS OF GLOBAL TRADER. UNDER NO CIRCUMSTANCES IS IT TO BE SHOWN (OR GIVEN) IN PHYSICAL OR ELECTRONIC FORM TO ANY OTHER PERSON, WITHOUT THE PRIOR CONSENT OF THEMARKET.CO.ZA. FURTHERMORE, ELECTRONIC TRANSMISSION (EMAIL), REPRODUCING, AND/OR DISSEMINATING THIS DOCUMENT (OR PART THEREOF) IN ANY OTHER MANNER WITHOUT THE WRITTEN CONSENT OF THEMARKET.CO.ZA IS A VIOLATION OF THE COPYRIGHT LAW - AND IS ILLEGAL.
