Quote from Xspurt:
Good read but I can't comment more until I hear from achilles28. Even though the market has moved now his response will help me answer his question.
However, why not trade short and reverse if this is your read?
Okay. Thanks for waiting for me
The current 4hr eurusd chart (@7:55 pm, EST) is attached below, with appropriate markups. But I will also comment on fridays and todays price action, so you can get a better idea of what I'm thinking. Friday and todays action was very repetitive, which makes it easier for me to analyze
Friday March 16th was the follow-through from a down trendline break. Usually, after a trendline break - regardless of timeframe - a pullback will occur (wave#2), whereupon a resumption of the new trend follows (wave#3). Price did exactly that, however with a couple twists. The first twist was a 1-2-3 reversal on the 4 hour chart marked by the dotted green-line (@~3068) However one defines a 1-2-3 reversal, that was a classic short set-up (which is perhaps why you said it could go either way, for a big move?) and would have caught me short, where it soon reversed into the bigger push you caught @3050. Interesting to note the 3050 reversal coincided nearly exactly to the pip of the backside from the old, broken, down trendline. This is what cornix likes to call a "backside touch" or "backside entry". Classic ta here. So while you guys were waiting for the long, I was following the 1 minute at that point, which was showing 1-2-3 reversals and pullbacks to the long side, which is how I caught the long at ~3055...on the micro-level (with a lot more stress). Another possible way to have caught that mega up-trend, was to draw another trendline down, in the direction of the failed 1-2-3 pullback, and go long after trendline break (as denoted by the dotted red trendline).
So after the first big thrust up from 3050, the first new green up trendline is drawn on the 4 hourly from the bottom of the old trend, with point #3 at ~3050 (solid green trendline). Price retested the ~3187 high on March 18th, effectively making a double-top, then retraced down to 3150 during mondays session...and sprinted back in the original trend direction, with the new green trendline drawn to denote the faster trend, after a new high is made @3267. Interesting, on the 1 hour chart, price came right back down to 3150, tested, and shot back up. Easier to see on the 1 hr, afaict. Also, like the first pullback, the second pullback made a classic 3 wave pattern, trapping shorts in, before it tested the xx50 level for support and resumed in the original direction. Now, a little gold for all the trend followers, during pullbacks, the first higher high can be bought in an uptrend, and, during downtrend pullbacks, the first lower low can be shorted. Lots of ways to get in on pullbacks here, but using that method (hh, ll), the first hh could have been bot at ~3176 for a small loss. Then a second try made @3170 for a big win.
So moving to the current chart. Price recently tested 3250 and found resistance. The test and rejection is easier to see on the 1 hr. Our new, faster trendline on the 4 hr coincides nicely with the 3200 level, where I would expect if price continued it's current retracement from 3250 down, would find support at or near that level (3200) for a long. A couple things could also happen. Price could break 3250, making a first higher high in this pullback, which is a nice place to go long and squeeze the shorts caught in this pullback. Two, we could draw another trendline that defines this current pullback downtrend, wait for a break and go long. Which it looks very close to doing. I would feel more comfy drawing a 1-2-3 downtrend line on the 1 hour, as on the four hour, the setup isn't classical. I like my 1, 2, and 3 points to be defined v bottoms and ^ tops. It's also possible we get a higher high, without making a new trend high, then break the bottom of the failed pullback (1-2-3 reversal). But as it stands, I'm short from 3247, waiting for a higher high at 3251, to go long. I'm gonna keep it to just the four hour here for analysis
