What the daily is telling me about EUR/USD exhaustion.

The daily EUR/USD has been trading higher but when looking at this time frame within its one-year market memory or lookback, the 34EMA Wave has not yet taken on an ESTABLISHED “twelve to two o’clock” angle and this means that while the rally certainly has bullish sentiment and momentum (reflected in the green GRaB candles) the transition does not show that the trend has completed and therefore the bullish sentiment is not the dominant psychology.

There’s a lot going on on this chart. Let’s break it down to what I see…

6-6-2011 11-34-47 AM.jpg

The daily chart of the EUR/USD with the 34EMA Wave and GRaB candles help me determine the market trend and the psychology of the market.

The daily time frame is what I use to determine what I call Directional Bias which is the dominant psychology of the market for that pair (or futures contract, stock) and therefore I can gain insight into whether corrections will be bought or sold into and whether the bulls or bears are in control. This is all very important and effects the entries I will consider intraday as well.

The daily time frame tells me that while I should respect the strength in the euro, there is a chance that prices will exhaust as the 1.4600 to 1.4650 area comes into play. With an overbought Stochastic (21,1,3) the distribution fade entry is a viable strategy, albeit aggro.

Another option would be to wait for the weakness and if it comes, look for an opportunity to buy into the correction for a swing trade on the uptrending 240-minute time frame.

On the flip side of the EUR/USD swing BUY is a potential 240-minute USD/CHF swing SHORT on a correction higher to 0.8386 which is a very aggressive short sell at the 20 period SMA. The more conservative short sell is waiting at the 0.8415 level but because of the fact that the 0.8400 major psychological level is sitting just 15 pips in front of this entry, I would consider teh 0.8395 level and step in front of the size (and therefore potential selling pressure) that may be waiting at the “00”.

6-6-2011 4-20-44 PM.jpg

The 240-minute USD/CHF is in a downtrend with a confirmed “four to six o’clock” angle of the 34EMA Wave as well as a bearish Directional Bias on the daily time frame.

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  • chicko

    I see declining volumes from 6 may.(daily)
    And it shoud definetly test 1.4850 high.

    If talking only about daily then, if it goes back under 1.4310 then I’m not playing.

    My system is just building up, but bedrock is horizontal lines…
    So sell below 1.4030 low (after pullback), or buy above 1.4850 high(pullback also)

    Stop loss: long, previous low
    short: previous high
    risk/reward = 2:1; 3:1    average
    But just lke I said I’m just building.
    And testing only this so far 1 month. +780 pips
    Also testing 2 MM systems
    -=Standart with 5% in every deal, from 400$ = +62$
    -=With same size lots in every deal(0.01) from 400$ =  +156$

  • Ksull2001

    Have gone to several websites to download the 2.0 GraB update (including ragheehorner.com mentioned in your tutorial on installing GraB 2.0).  Where might I find this.  Also, the video cuts short just before giving the full path on where to install the extracted files.

    Thanks for any help.  Karen