Best of the Week
Most Popular
1. Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - Nadeem_Walayat
2.Gold Price Focusing on May Cycle Bottom - Jim_Curry
3.Silver, silver, and silver! There’s More Than Silver, People! - P_Radomski_CFA
4.Is the Malaysian Economy a Potemkin Village - Sam_Chee_Kong
5.Stock Market Study Shows Why You Shouldn’t “Sell in May and Go Away” - Troy_Bombardia
6.A Big Stock Market Shock is About to Start - Martin C
7.A Long Term Gold Very Unpopular View - Rambus_Chartology
8.Stock Market “Sell in May and go away” Study When Stocks Are Down YTD - Troy_Bombardia
9.Global Currency RESET Challenge: Ultimate Twist - Jim_Willie_CB
10.The Coming Silver Supply Crunch Is Worse Than You Know - Jeff Clark
Last 7 days
New Tech To Revolutionize The Billion Dollar Marijuana Business - 28th May 18
A Recession Indicator for Independent Thinkers - 28th May 18
Economy Still Too Strong to Induce Stocks Bear Market Recession - 28th May 18
Theme Parks 2 Min Bar Hang Challenge - Normal vs Spinning / Rotating Bar - 28th May 18
Blackstone, BlackRock or a Public Bank for California’s Money? - 27th May 18
Stock Market Study: How Long After a 10%+ “Small Correction” to Make New Highs? - 27th May 18
Gold, US Stocks and Bonds - 26th May 18
Climate Change Canaries and Our Changing Climate - 26th May 18
Gold Junior Stocks GDXJ ETF Fundamentals - 26th May 18
What to Expect at a Critical Stock Market Point: End of a Wave 2 Rally - 25th May 18
Merlin Passes Top Tips for Buying and Using Premium vs Standard, Theme Parks UK - 25th May 18
Trump “Victories” on Trade are Anything But - 25th May 18
Crude Oil: It’s Here! - 25th May 18
Stock Market Distribution Pattern Revealed - 25th May 18
Stock Market Topping - Everything Looks Rosy at the End of a Trend! - 25th May 18
Trump Puts North Korea Nuclear WAR Back on Track as Plans for Nobel Peace Prize Evaporate - 25th May 18
Insane EU GDPR SCAM Triggers Mass Email Spam Attacks! - 24th May 18
Stock Market Higher Again, but Still No Breakout - 24th May 18
Study: Slowing Global Economic Growth IS NOT Bearish for U.S. Stocks - 24th May 18
What if This Week’s Rally in Gold is Already Over? - 24th May 18
EUR/USD – Reward for Bears - 24th May 18
5 Terrible Trading Mistakes That Rookie Investors Keep Making - 24th May 18
More Clarity for the Short Term for Bitcoin Price - 22nd May 18
Study: A Rising and Strong U.S. Dollar Isn’t Consistently Bearish for the Stock Market - 22nd May 18
Gold, Silver & US Dollar Updates with Review of Latest COTS - 22nd May 18
Upside DOW Stock Market Breakout May Be Just the Beginning - 22nd May 18
5 Reasons Why Forex Trading Is Becoming Such A Big Deal In SA - 22nd May 18
Fibonacci And Elliot Wave Predict Stock Market Breakout Highs - 21st May 18
Stock Market Ideal Cycle Low Near - 21st May 18
5 Effects Of Currency Fluctuations On The Economy - 21st May 18
Financial Conditions are Still too Easy for the Stocks Bull Market to End - 21st May 18
US Stock Market Elliott Wave Predictions for 2018 and Beyond - 20th May 18
Are You Still Fearful of Cryptos? - 20th May 18
US Stocks - Why I am Short-term Bearish, Medium-term Bullish - 20th May 18
Looking for a Turn in Gold Price - 20th May 18
GDX Gold Mining Stock Fundamentals 2018 - 19th May 18
Semiconductor Stock Market Canaries: Chirp, Warble… Soon a Croak and Silence? - 19th May 18
Three Drivers of Gold Price - 18th May 18
Gold Market in First Tertile of 2018 - 18th May 18

Market Oracle FREE Newsletter

Trading Lessons

Euro Signs Of Caution For Upside Move

Currencies / Euro Feb 20, 2013 - 03:16 PM GMT

By: Michael_Noonan

Currencies

Oftentimes, first impressions are the best because the perceived information strikes the mind unfiltered by second and third impressions that may begin to second-guess the first. The weekly and daily charts of the Mar Euro are first impression expressions.

Many will look at this weekly chart, well, maybe not so many, but of those who do, they will see that the recent high rallied above the February 2012 swing high and conclude the Euro is acting well. We would disagree, and here is why.


What caught our eye was the steep decline within the box, noting how fast the rate of acceleration was on the decline. Every succeeding weekly high was lower than the one before it for 11 straight weeks. Sellers were clearly in control, and when challenged on the next rally, they will defend their "territory." The largest of all the bars is the first one that began the sell-off. The next bar after it was a failed rally against it.

The challenge to that seller's control area is now, or a few weeks ago. Recent price stopped right at where the acceleration and failed rally began. You can see how the Euro is in an uptrend since last July. The solid, lower support TL captures the trend. We drew a second, parallel supply line using the September 2012 swing high and extending it by dashed lines to reflect the fact that it is projecting into the future, from that point in time.

When price fails to reach the upper channel line, it is the market's way of telling us that the trend has weakened. It does not mean it is over, just a little weak. That leads us to the second observation that caught our eye, as it related the accelerated move down.

Two weeks ago, you can see a wide range bar down on a sharp increase in volume, right after the high, and it closes poorly. This should not happen if buyers are in charge, and the market may be sending an important message, once again.

We want to take a closer look at daily activity to determine if the character or this not-so- strong rally is in jeopardy. We say not so strong because the move up has been somewhat labored, backing and filling. Contrast it with the accelerated decline.

Markets do not lie. What they do is generate information that tells us what participants are doing in their buy/sell decisions. A similar channel has been drawn on the daily, and price reached an overbought condition on the first TD of February. [Trading Day]. Look at what happens next day. Not only is there no follow-through, price opens under the previous day's close and declines all day. What happened to the buyers?

We mentioned the wide range bar down, [weekly] and we see how it began on 7 February, accompanied by the highest volume for the contract. It pays to heed high volume days because they are an expression of increased activity between buyers and sellers, and who wins the battle can be important, even more important when it occurs at a certain area, like the current swing high.

The market continues to provide us with additional information over the next 4 TDs, with the 4th one culminating what can only be described as a week rally response to the wide range decline on heavy volume. Note where price closed on that day, 5th bar from the end.

The decline has found some support at the trend line, which should be expected, but more because of the small trading range in the middle of January that should act as support, or at least a buffer against a decline.

What may be key for Euro traders is how the market reacts from this week's low, so far. The character of the rally will say whether to expect higher prices to come, or abandon the buy side. In fact, depending upon how any rally may develop, the market could also be advertising a short sale. There is some history behind the reasoning that goes back to that area of acceleration a year and a half ago. It would be a mistake to overlook it.

By Michael Noonan

http://edgetraderplus.com

Michael Noonan, mn@edgetraderplus.com, is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

© 2013 Copyright Michael Noonan - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Michael Noonan Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules