Is EU still Bullish?

Well, it was some rally in last two weeks. Bulls were riding all over bears. Bears were getting hurt all the way. It reached 3100 and still no signs of any downfall. So, why is it falling this week? Well there is no exact answer some may say its Fibonacci retracement, some may say their Stochastics giving overbuy signals, and others have their own reasons. This is a physics law that "it is not possible to move without friction". So, bulls can't keep running forever, bears will interfere.

As a result it fall steadily from 3160 to 3000 which is definitely the friction in this case as a correction is required to keep trend moving further. So, where is EU standing right now?? Is it still bull? Has it reversed? Let my chart answer that for you.

eu%20199.jpgEU high probability setup

As you can clearly see, there is a giant bull flag formation in this steady fall of EU. It was also not advisable to buy at 3160 because stochastic were overbought. But now, EU still consolidating in a bull flag with Stochastic showing Oversold signal, is a nice time for bulls to rally again. There is a high probability of uptrend continuation as all indicators are in positive side which means there is a high probability of long from here. But again we can only trade based on high probability. I will buy it on the break of bull flag in 4 hr chart.

Thanks

9 members like this

Comment by Peter jcp on September 19, 2012 at 5:55pm: Hi KK - liked you chart set up ( even though its a 4 hr with standard setting ;-) ) but also like your reasoning behind your forecast. Will it break out above the bear flag - I don't really know? - will it drop down under 2992 and 2980 for your support levels of 2915-20 ?- I don't know. Will it stay between 3085 and 2992 for a few days ? - I don't know.

But with very high probability I am sure we will have more clues again after London Open tomorrow.

Just out of interest what level do you need to start buying more at and then what are your 3 targets?

Regards

Peter

Comment by Kkavya on September 19, 2012 at 6:06pm: @peter: Initially I will buy when 4 hr candle will break the flag and finish above it which is usual entry point. As usual, it will be a testing lot so will not take much risk on first entry. I will then pyramid it as per the price action in future. Targets are not as such particular as I will be trailing the stop loss accordingly.

Comment by Peter jcp on September 19, 2012 at 6:12pm: Good Stuff - I wish you well if it breaks above

Have a great day tomorrow.

Comment by Kkavya on September 19, 2012 at 6:29pm: you too mate :)....

Comment by Peter jcp on September 20, 2012 at 8:48am: Hi KK - when it fell under 1.3000 and 2992 - I think we all got the feeling this was going lower again.

2941 and 52 are my scalping supports for buys and really 92 -97 area for sells again atm

Will be interested to hear about your next thoughts etc.

Comment by TT on September 20, 2012 at 9:19am: I'm not fundy but you can't fight the FED, unlimited QE and ECB unlimited bond purchase!! It's the timming that's difficult, the direction is clear for the momment.

Comment by Peter jcp on September 20, 2012 at 9:27am: Timing is Tantramount - is a phrase KK might have heard from Sir Gissa. Its also the sentiment set by the market makers that is so key. They - the big players want you to mislead Simon and although I agree with you after the big rise - we seeing 200 pip + falls - that still might go lower for now - before the news direction is switched again ;-)))

Comment by Romano on September 20, 2012 at 10:37am: Truth is that ECB is also printing unlimited so even though its bullish at first, I guess fundamentally and inflationary ECB is now fighting eur upside - especially when last month reports were that lower eur value helped eu trades.

But chart-wise, I also see it as bullish flag but I expect it to go to about 2700 and bounce from there. There is previous peak at daily and 38.2 fib. Another point for bullishness is that most of time markets tend to do at least some consolidation or double top/bottom before reverse, or last peak tend to be clear pinbar, so it could go at least to previous high or more(3300), but question is from where... to me things point out to 2700 or lower and as u know, Fuhrer is shorting for even lower soooo......

PS: Another option would be more immediate up up-to about 300-500 pips more and then much bigger reversal down.

Is EU still Bullish?

You need to be a member of FXstreet.com Forex Social Network to add comments!

Meet Real Traders Like Yourself!:

Amplify Trading 20% OFF