In our previous currency update we stated that the Euro would not snap the orange circle zone shown below as simply the currency was oversold with massive shorts attached and volatility was stepping up with the media behind every move - perfect ingredients to buy!
At Trading Market Signals we issued a buy signal to all members today in which the entry price was nice and cheap! - 12170.
Well of course, our members, have thankfully, gained 250 points on the signal!
Here was the long term chart of the Euro shown in our previous article:
The message was simple. The contrarian play was to go long as everyone is short, it's hitting the media big-time and your local taxi-man is talking about. Whilst the expectation was for prices to hit the red circle as shown above, we had a total different scenario mapped out.
The following chart was using Four Hour candlesticks, brilliant for short term projections!
You can see precisely by the smaller yellow line as to why we immediately knew the low was forming.
The small red line may produce a minuscule reaction but once the market takes out 12444 we would likely see a straight move to 125.
Of course our initial target is the blue star and if it is tackled it will likely take us to our overall target 130-131 marked by the green lines and the red arrow.
In our previous update for the Dow Jones we illustrated how different technical depictions can be made using the same timeframe. Not only were we using the same timeframe but we were mapping out channels on all four charts as you can see below:
We stuck our neck out and stated the last chart above is how we see the next move mapping out. We mentioned that an initial rise in prices will be followed by declining action and that's precisely what we got!
We turned around on Monday which you can see was supported by the downward red channel and the rising blue channel. In line with our analysis we rose first on Tuesday above 10700 in which you can see as to why the move failed as it would have clashed with the downward sloping channel and this of course started the decline we mentioned that would kick in after a rise.
The Dow Jones is entering the lower avenue of this red declining channel but then manages to close above it sitting within the second avenue of the channel.
We would now expect prices to rise again in which the blue channel will be regained. It seems like the downside has been completed today for the short term.
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