Hello friends, this week we have again EURUSD in our watchlist. If you are with us, you may remember we shared the level where EURUSD may react, and so it did. Now, without hurrying, and until DXY (dollar index) confirms the reversal, we are marking our favourites zones in eurodollar to place our orders with a great RRR. Remember also that the 50% of the Weekly order block inside the Cypher pattern was our cheapest price. So far so good.
As I stated before, DXY is the one who will tell us if the movement is true. Last week, price reacted at a very interesting zone, one of the two zones that we marked for posible reversal in the strength of the Dollar. Don´t forget that EUR is the most weighted currency inside the basket of DXY (feel free to ask why).
For our confirmation in EURUSD we need a clear market structure where the sentiment will turn bearish once broken. This zone is given by a daily OB (pink candles) which was already capitalized. Above it, you can see a yellow Liquidity Pool where big players and retail have their sell stops and stoploss placed. Algo trader may use that liquidity to send EURUSD north again if DXY is still going to the second zone. If not, EURUSD will break and we will look for other prices to place our sell orders with a good RRR. (See the reaction at 227FE level)
So , in case that the Liquidity Pool is visited, I would wait for the expected reaction there and will see if this Cypher pattern plays.
The buy trade has an almost 4:1 RRR but the most important part of this plan is to sell x2 at 1.2306 for riding safely the posible new trend. If we do so, and EURUSD reverses there, we can discuss where we can take 50% TP and where to close the rest (for me 1.1494). If SL is hit (-41×2) we take profit of our buy trade (+200), so still we made 120 pips in the worst scenario.
Don´t forget to check the rest of the analysis like last week´s NZDCAD and NZDUSD since we will milk those pairs as well. Remember you can learn in 6 months how to analyze the charts and trade profitably with the ATA Course. Register here and we will contact you, or send us an email at email@example.com
Have a pipful week!