Pound is Still Falling against US dollar

Despite the fact that gbp/usd move down got slower, it is still going south. It seemed that there was going to be a reversal today. Why? If you look at 15 minute chart you can clearly see that Monday low did not exceed Friday low. It actually resembled a double bottom pattern. However, during European session today the lows was taken out and new low was made. Yesterday lowest point was at 1.5340 while Friday low stood at 1.5335. Now American session is in full swing and the lowest level today is 1.5304. The fall may continue further.

The best play for such market is, of course, selling rallies. Such an opportunity presented itself right on the London open. Three arrows on the chart indicate a reversal, which shows that counter trend rally is over and price is about to move down again. It is also obvious that 200 ema acted perfectly as a resistance level on 15 minute chart. Just look at those candle pins to see for yourself. 

Neither data from UK, nor from US could stop cable from collapsing. Well, more important news is coming at 14:00 GMT when ISM Manufacturing from US is released. Trade only from the short side till you definitely see a trend change.

Reversal pattern in eurusd

I have already said a number of times that eurusd has been in a short term downtrend and selling rallies is the best policy under such market conditions.  Euro has been rallying into London open and right after the open at around 07:14 GMT price hit the highest point for today. It then proceeded to form a reversal pattern that can be clearly seen on both 15 and 30 minute charts. 

Furthermore, you can see that resistance coincided with 200 ema on 30 minute chart. This added extra confirmation about the strength of the sell signal. Entry point was at 1.1060 with a stop loss at 1.1075. Take profit is at yesterday’s lows: 1.1020. As you may see risk/reward ratio is good. 15 pip stop loss and 40 pip take profit. 

I will take extra caution today as we have important data coming from US. At 12:30 US CPI is to be released and 18:00 GMT FED minutes. Both may have tremendous impact on both Euro/Dollar and Pound/Dollar exchange rates. 

So, I might close my short at or before US session begins, because 30 minutes into it CPI comes out. You don’t want to carry around a position at such events, unless you are a swing or trend trader and hold your trades for weeks and possibly months. Volatility should increase as market is searching for direction and these numbers can surely give direction. Take care!

I will come with an update sometime around US session.

Reversal pattern on eur/usd 30 minute chart

Morning star on eurusd 1 hour chart

After a break of yesterday’s low and some consolidation eur/usd formed a morning star pattern and is rising now. I may remind you that it is a bullish candle pattern formation that indicates bullish pressure and may serve as a signal to go long. 

The pattern should be taken even more seriously as it formed right on 200 ema on 1 hour. You see, we wait for more points of confluence in order to take a signal. Just the mere fact that it is on 200 ema or sma is not enough to go long or short. You need more factors and the second one is morning start candle pattern. 

The first level of resistance is even number of 1.1100 that coincides with 200 sma on 15 minute chart. The next much stronger resistance level is yesterday’s high: 1.1125 level. 

On the other hand we should remember that the pair has been going down since last Thursday when it formed a peak at 1.1213 level. 

We should also remember that long term trend has been down for a year now. Intermediate trend is neutral and short term trend is down. Yet day traders can trade both directions when key points of intra day support or resistance are reached. 

Morning Star candle pattern on 1 hour chart in eur/usd