EURUSD Monthly Chart with 5-EMA – Currently Not Extended

This post is a follow-on to the previous posts showing monthly charts with the 5-EMA. The charts for the USDCHF and GBPCHF pairs show current situations where price is extended away from the 5-EMA, and whether this is a decent clue for the risk of reversal remains to be seen. However, the yellow squares on the EURUSD chart definitely show that on many occasions when the EURUSD has been near a turning point on the monthly time frame, it has found itself extended away from the 5-EMA. The most recent example was 1 year ago with the EURUSD plunging to lows on the monthly chart in the low 1.2000’s high 1.1teens.

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DIBS Chart Book for Week Ended July 15th 2011

The latest chart book with DIBS set ups highlighted is available. This past week featured a volatile breakout at the beginning of the week on the “risk off” theme, which was very good to early week DIBS breakouts. As the week progressed and the risk-off sell offs retraced, the action became choppier and less favourable to DIBS signals.

Enjoy,

FXdibs4pips

 

Did you know EURUSD has done a Gap Fill on Wednesday 2x in 2011?

Just this past week, the EURUSD rallied up to complete a gap fill of the Friday-Sunday gap on a Wednesday. That’s the 2nd time that EURUSD has done the gap fill on a Wednesday.

·         July Gap Fill Details – 1.4264 is the level for the gap fill based on Friday July 8th closing price, the gap fill is completed on Wednesday July 13th late in the day (more like Thursday Asia session I suppose).

·         April Gap Fill Details – 1.4429 is the level for the gap fill based on Friday April 15th closing price, the gap fill is completed on Wednesday April 20th early in the session (Asia trading).

EURUSD – liquidity gap fill to the downside in progress?

I like this chart of EURUSD for the last week, it shows a possible weekly time frame pin bar being formed on the 1H chart, the only thing EURUSD needs to do is finish the week near the current levels, which is by no means a certainty. The chart demonstrates some of the patterns found at the www.nobrainertrades.com web site, which is a great resource for forex traders. The spike base pattern is one that I like to keep my eyes peeled out for on 1H and 15m and 5m charts because it repeats a lot (http://www.nobrainertrades.com/2009/06/spike-base-pattern.html). In this environment where EURUSD is capable of trading like a yo-yo between EU debt concerns and the laundry list of USA concerns (debt ceiling, QE speculation/anticipation etc.) the pattern becomes that much more important since liquidity gaps crop up as a result of ad-hoc news (comments on wires by central bankers, bond auction results, rating agency downgrades, etc. etc.).

If EURUSD wants to print a pin bar for weekly chart this week, maybe on Friday it will try and print a pin bar too, perhaps by tagging the 1.4090s area (Missed Daily pivot from Tuesday)….

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EURUSD – Resting at Half-Way Point of YTD 2000+ Pip Range

EURUSD’s sell off into the 1.3800’s zone today saw price pull back for the first time in 2011 to a daily 50% retracement level, at 1.3906.

·         What lies beneath? – 1.3660’s is 61.8% retracement of YTD range, but before that there is a 1.3750 low from March-2011.

·         What lies above? The 1.4260’s is the gap fill level from last week, basically this is the zone near the post-NFP lows on EURUSD

When is a good time to look for a bounce? Look for an Up Day on daily time frame. Notice that when EURUSD in 2011 has been selling off or pulling back in a sequence of seller days (red bars in chart below), that once that sequence is interrupted by an up-day (blue bars in chart below) then the following days often show a pattern of bouncing upward. That pattern is called “go with the flow” J  

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EURUSD Sell Off Jacks Up Correlations – Typical “Risk-Off” Stuff

The sell off in the EURO across multiple currency pairs has shown the typical risk-off type of price behaviour as correlations have been jacked up across the various EURO pairs.

Having checked out the correlation matrix at the mataf site (www.mataf.net) for a few periods you can really see how the short term action in the EURUSD has changed a bit. I used the correlation matrix for the daily time frame set to a 30-period for recent price action and to a 90-period for a longer time window (roughly one calendar quarter) and here are some results 

Daily Correlations – EURUSD way up there with EURCHF and EURJPY Lately

  • EURUSD – EURCHF – short term correlation has been jacked up…..like…a lot!: The 30 day correlation stands at 82.7 versus 90-days at -2.2, that is a huge difference. The screenshots below also show that over much longer periods (30 and 90 weeks) the correlation is quite low.
  • EURUSD – EURJPY – short term correlation has jumped up: The 30 day correlation stands at 91 versus 67.2 for 90-days.
  • EURUSD – EURAUD – another short term correlation that has jumped up a lot:  The 90-day correlation for EURUSD/EURAUD is -14.4, so in that context the increase to a +67.8 for past 30 days looks pretty sharp. Looking at the table below you cal also see that EURUSD-EURAUD has shown a similar correlation level as EURUSD-EURCAD, another “commodity linked” pair.

The chart below shows the figures for the 30-period for Daily and Weekly

12-07-2011_11-37-48_euro_pairs_30period_correlations

The chart below shows the figures for the 90-period for Daily and Weekly

12-07-2011_11-37-48_euro_pairs_90period_correlations

What does this mean for trading the EURO Pairs in the near term?

  • EURO-related news dominating headlines = look for high probability opportunities where several Euro crosses appear to be in agreement. For example, a study of the 1H Chart on the EURJPY and EURCHF for the period from July 11th until London open on July 12th showed highly similar price pattern of decline and consolidation prior to the 8-AM London open. This type of configuration can provide that extra bit of help when looking at opening range breakouts.

 

DIBS Chart Book – Week Ended July 8th

The latest DIBS Chart book is available for the week ended July 8th. The week was quite volatile as there was a lot of “risk off” type news developments. On many occasions the DIBS signals ended up being reversal patterns instead of trend continuation breakout patterns.

This week’s chart book covers EURUSD, GBPUSD and the “risk-on / risk-off” pairs: EURCHF and EURJPY.

Good trading,

FXDIBS4PIPS

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