TradersClass

Superior Trading Skills through Education

 
A Great Reversal? Print
Written by Site admin   
Saturday, 04 July 2020 10:05

In the last newsletter the US$ featured. The big question was, is this a Great Reversal taking place as we watch the charts unfold.

It all takes time of course, and we will only know the answer when, and if, it does in fact collapse. We may have to wait some time!

When the US Dollar falls, the Euro tends to rise. It's an inverse relationship that is never perfect but does create opportunities for traders. As the US Dollar was topping, the Euro was bottoming, bounded by those red lines that pick out support and resistance zones from way back.

Everything has a life cycle and markets are no

exception as Stan Weinstein taught us. Price action can stay for a long time in accumulation at bottoms and in distribution at potential tops. This stage 2 up trend in the EURUSD mirrors the stage 3 down trend in the Dollar.

Is it all over now for the dollar collapse and Euro rally? Switching from the macro view to micro, the four-hourly chart reveals greater detail and a pattern that's developing.

The classic head and shoulders has been a valid pattern since the beginnings of trading and charting and, like all setups, some work out and some fail. Either way, there is likely to be a tradable setup.

Price action could well now drop away from that possible right shoulder and pierce the neckline. If so, traders would expect a stage 3 down trend that could run all the way back down, almost to where the stage 2 up trend started. Was there an earlier entry setup?

Drop down to the 30 minute charts which present numerous day trading opportunities across the major currencies.

The top, and subsequent candles, created a Catapult FBR setup, all fully revealed in the new course, Great Reversals. Time and again this pattern so often leads to an explosive reversal, it's too good to miss.

This gave a low risk entry, the only ones worth taking, which has given part intra-day profits of 61 pips. The remainder of the position will stay on, which will become the foundation of a larger sell position, if the daily chart neckline gives way.

The new course, Great Reversals, Trends, Ranges and Setups is now available by clicking this link.

 

From the blog

Next Wednesday, up they go again...

The consensus is the Federal Reserve, at it's June FOMC meeting Wednesday 13th, will confirm the next US interest rate increase, from 1.75 to 2%:

The consensus, 'dot' plot and forward guidance is as plain as day. But, today, the bond market just had a hissy fit...

The standard 30 year US T Bond has been tumbling down this year. Interest rates do the opposite of course, moving on up as bonds slide. But just look at the chart. The chart bottomed on May 18th, rallied then tumbled again, until today, June 7th.

The 4 hour chart shows a major key revesal day, lower early in the day then higher than yesterday. Key reversals (or the candle version, Bullish Engulfing) are one of the strongest one day signals in the market.

What does this mean?

Maybe nothing more than traders liquidating their previous short position profits, just in case something unexpected comes out of the Fed minutes.

Or - the market just got the idea the Fed will change it's mind and delay the increase. The dollar will tank and stock markets will soar even higher. Stranger things have happened, just when everyone least expect it.

 

Check these links

  • JoomlaWorks Simple Image Rotator