{"id":18086,"date":"2011-01-14T07:50:25","date_gmt":"2011-01-14T12:50:25","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=18086"},"modified":"2011-01-14T07:50:25","modified_gmt":"2011-01-14T12:50:25","slug":"eurusd-could-we-predict-the-bullish-move","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/01\/14\/eurusd-could-we-predict-the-bullish-move\/","title":{"rendered":"EUR\/USD \u2013 Could We Predict The Bullish Move?"},"content":{"rendered":"

By Yan Petters<\/strong><\/p>\n

On January 10, after the EUR\/USD<\/a> pair saw a third failed attempt to fall below the 1.2870 support level<\/a>, a bullish correction took place, and the pair gained about 580 pips within four trading days. Is it possible to predict such turn of events<\/a>? Let\u2019s try to answer this using technical analysis<\/a>.<\/p>\n

First, please observe the EUR\/USD 4-hour chart below; this will be the main tool we\u2019ll work with in this article.<\/p>\n

Now, let\u2019s look for all the signs that could have driven us to suspect that a bullish reversal is about to take place.<\/p>\n

\u2022 As written on the opening paragraph, the bullish correction only took place after the pair saw several failed attempts to fall below the 1.2870 level. When a currency pair sees such a strong support level \u2013 traders must question whether the market actually desires to see the pair traded below this level. It is no coincidence that the pair\u2019s bearish move is blocked over and over again at the exact same level.<\/p>\n

\u2022 Look at the Slow Stochastic<\/a> indicator. First, a bullish cross was completed below the 20-line. This often means that a bullish correction might be impending. In addition, no less than three additional bullish crosses took place afterwards, all within a very short period of time. The first bullish cross has signaled that a bullish move might take place, the other bullish crosses that followed have signaled that the market is reluctant to let the pair resume to a down-trend.<\/p>\n

\u2022 The MACD<\/a> is probably the easiest to analyze. A bullish cross at the bottom of the section is very likely to predict a bullish reversal. As you can see, the MACD has never switched its indication, and continues to provide bullish signals.<\/p>\n

\u2022 The Relative Strength Index (RSI)<\/a> has provided two significant bullish signals. First, it rose above the 30-line, reaching out of what is referred to as the over-sold area. When the RSI crosses the 30-line and continues to point up, it usually mean that the currency pair will follow its lead. The second signal was given once the RSI failed to fall below the 70-line. If the RSI would have fallen below this level, it should have warned us that the bullish move might have reached its end. However, once the RSI reversed its direction, and once again pointed upwards \u2013 it signaled that there is still significant bullish pressure on the pair.<\/p>\n

\u2022 The timing of the bullish correction could have been predicted using the Bollinger Bands<\/a>. When the Bollinger Bands are tightening, it\u2019s a clear signal that a sharp movement is likely to take place. Considering all the bullish signals written above, traders could have suspected that the Bollinger Bands are signaling that the bullish correction will take place soon.<\/p>\n

\u2022 Last but not least \u2013 sophisticated traders could have noticed that a double top pattern has begun forming on the chart. Once the pair crossed the 1.3020 resistance level<\/a>, the beginning of the pattern could have been observed by traders, and once the pair crossed the 1.3200 resistance level \u2013 traders could have seen it as a signal that the pattern will be completed, meaning that the pair will reach the 1.3450 level.<\/p>\n

\"\"<\/a><\/p>\n

Forex Market Analysis provided by ForexYard. <\/a><\/strong><\/em>
\n<\/a><\/strong><\/em><\/p>\n

\u00a9 2006 by FxYard Ltd<\/p>\n

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.<\/p>\n","protected":false},"excerpt":{"rendered":"

On January 10, after the EUR\/USD pair saw a third failed attempt to fall below the 1.2870 support level, a bullish correction took place, and the pair gained about 580 pips within four trading days. Is it possible to predict such turn of events? Let\u2019s try to answer this using technical analysis.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-18086","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/18086","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=18086"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/18086\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=18086"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=18086"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=18086"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}