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Friday, September 18, 2015

Oil Rally Stalls at Resistance



In my previous post on oil I wrote about bearish triangle that could be seen on 1, 2 and 4 hour charts. On the one hand it failed to materialize when price rallied through upper trend line of 45.50-46.00 (I took a small loss on that one). On the other hand, that does not negate the fact that the commodity is still in a downtrend and may resume its long term direction any time. You may look at 8 hour chart below and you will see that for the third time price rallied to 200 ema on 8 hour chart and each time a bearish pin candle pattern formed causing price to stall and then to fall. 

The same thing happened today. You can see an indecision candle first, and then two bearish candles, the second one being the signal for a short trade and if you had taken it (I surely did) you would have made nice cash by now. I entered my short at 46.49 with a stop loss above the high of the current move (47.72) and I took my profit at 45.20. Risk reward ratio on that was 1:1, but as the pattern was really strongly bearish and easily took the trade without thinking much about it. 

Support remains as it was at 43.50-43.00 area. I do expect it to be broken soon and price to reach another new low for the year. In my opinion oil is headed towards 30 and then possibly to 20. I play it only from the short side for the time being. 

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Wednesday, September 16, 2015

Oil Hit Upper Trend Line



I mentioned in my earlier post that a possible bearish triangle was in formation in oil. Looks like my predictions are confirmed as today price hit upper trend line of the triangle and is reversing to the downside at the time of writing. As you may see from the chart below we have pressure building up for the commodity to go down. Any time it rallies up, it faces resistance earlier than previous time. So, the first point was 49.30, followed by 48.40, then 46.40, later 46.00 and now 45.60. Let me remind you that breakout traders would sell a break of key support that currently is 43.50-43.00 area. 

If breakout materializes we may see the security to go down as low as 37.50 (the low of August 24). I do have a small short position from 43.16 with a stop loss above today’s high. Let’s remember that the longer term trend is still down and a resumption of the direction may start any time now. FOMC rate decision tomorrow can surely be a good trigger for the continuation of the downtrend. Anyway, any bearish candle on the hourly chart at resistance could be a good point for entering a short position. Let’s wait and see what happens to the commodity. 

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Tuesday, September 15, 2015

After a Few Weeks of Rise eurusd Reverses



After a few weeks of rise, eur/usd finally reversed. The turnaround started on Monday (yesterday), when having reached 1.1370 resistance the pair formed bearish rail road tracks pattern and started collapsing. Today’s price action only confirmed bearish bias in Euro. You can open both 15 and 1 hour chart to see that. Price tried to rally to intra day resistance of 1.1330 two times today, but failed. Each time it formed a bearish candle pattern after which price fell. As yesterday’s (low) support of 1.1280 was broken during US session we may assume that the move downwards will only accelerate this week. Be ready to sell at failed rallies to intra day resistance levels. 

Tomorrow’s possible intra day resistance will be at 1.1280. You remember the old saying that previous support becomes resistance and vice versa. I think this could be true in this case too. 

The next level of support is seen in the area of 1.1240-1.1220. Hourly chart clearly shows that Euro bulls had to work hard to break the level from the 8th to 10th of September. 

Important fundamental data that may impact the exchange rate of the pair is on Thursday when Federal Open Market Committee Rate Decision is announced at 18:00 GMT. Watch price action after the event and be ready to go in the direction market goes. 

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Monday, September 14, 2015

Rail Road Tracks in gbp/usd



Monday price action in gbp/usd has been as it usually is. If you monitor how currencies move at specific days of the week, how they open and close, you will surely notice some tendencies. This week was no exception. We saw directional moves during the past week as the cable rose against US dollar for the whole week. The tendency continued on Sunday open. You need to know that in most cases if there was a directional move previous week and market ended moving in that direction you are going to see a reversal on Monday. 

As always there was a false move up during early European session (during Frankfurt open) and the move upwards continued till the start of London session. Market then formed rail road tracks candle pattern and reversed sharply to the downside. I expect some ranging today and possibly tomorrow and then a direction to form. 

There are some important fundamental releases this week, the key one being FED Open Market Committee Rate Decision at 18:00 GMT on Thursday. I doubt if we are going to see anything significant happening before that date, but you should watch UK Consumer Price Index release at 08:30 GMT tomorrow and UK Unemployment change at the same time as CPI on Wednesday. 

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Saturday, September 12, 2015

Gold is Going Down in Waves



Gold went up in three waves during the month of August after a dramatic collapse in previous months. In the same fashion it has been going down since 21st of August when the top was made at 1170 level. The first wave formed from the 21st to 24th of August where it found short term support at 1145. It formed a bullish pin there. 

However, price made another wave down in the next couple of days from 25th to 26th of August. It then went up to test previous support that became resistance. 1145 was well defended by gold bears and price after ranging till the 9th of September proceeded to fall (third bearish wave). 

It looks like price has found its short term support at 1100 level. Bullish pin at support on Friday indicates that price may go to its previous support of 1115-1116 level (now resistance). 

Looking at a broader technical picture, it does not seem that the move down is over. We might expect one more wave down that would take the price of the commodity to 1080-1070 area. This is the area where gold bottomed in the months of July and August. The fall should stop at that area. 

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