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Daily and H4 Outlook for Monday (Comparison Study)
This week I wanted to share a more detailed analysis by putting both, the Daily and the H4 together under the microscope. This time it should give you a better and more simpler picture of this pair and the situation for coming week. I hope it helps..
- First when we look at the daily chart, we will notice that there is still no significant sign of bears. The Friday candle is red yes, but it still closed above its own half which indicates wishy-washy bearish power. It tells me that bears still need time and we shouldn’t expect quick shifts in this market.
- The only bearish sign on daily is the yet not succeeded trial of a new higher high. So far it just printed a lower high. But just by looking at this picture would be too early to point at a trend change.
- I especially marked 2 thick trendlines along the bodies of daily candles. That way we will know for sure which side the real breakout occurs. If we see a daily candle closing above 1.2538 (starting from Monday or later) we can assume bull trend will continue. If we see a daily candle opening below 1.2458 (starting from Monday or later) we can assume bears are coming. But….. closings above or below trendlines alone are still no clear indications for trend reversal. Look at them only as early indications.
- The simplest (roughest) way to identify the trend on any timeframe is to look if candles are above or below EMA 6 or 10 or 12 etc…. in other words by comparing price positions related to smaller moving averages. In my case trend is definitely still bullish on daily.
- Stepping onto the H4 Chart, now notice how the RED MA (btw.. I used the 12EMA here) is now FLAT— meaning we can expect short term* choppiness between PIVOT line and RED zone: A 60 pips area between 1.2490 and 1.2430!!! *If the GREEN MA line (I use 70EMA here) was flat, I would say long term choppiness… but in this case it is the 12EMA and therefore we probably will only see a short term choppy/sideways phase..
- The H4 chart gives us a cleaner picture of the lower high.. but now we can also see a lower low here, which wasn’t visible on daily.. VERY IMPORTANT! Based on the H4 chart now we can be prepared that bears might slowly getting the upper hand. But….. no need to get excited yet because price (candles) are still above pivot: 1.2430…. Only when we see a H4 candle close below 1.2430 or a touch to 1.2383 we could start to look for stronger bearish price action.
Now let’s summarize: On daily we are still bullish.. no signs of bears there. But on H4 we started to notice a lower low and then a lower high. We still will be careful in selling but we can start watching what the candles will do in following days:
- Red zone is still my potential sell area.
- Green zone wouldn’t be a potential buy area if H4 candles touch it.. But as long as candle shadows can’t touch this green zone or as long as H4 candles can’t close below pivot we could risk buy trades as close as it gets to 1.2383 (Maybe by risking buys at 1.2370 area)
That all being said, my trading plan for Monday will be:
- To keep selling the red zone unless I see a H4 candle close above 1.2490
- To buy as close as it gets (maybe 10 to 20 pips close) to 1.2383, and then once I am in, I simply would only watch if price pierces this level or not. As long as it doesn’t I would keep my buy trade.
Pheeew!! Was a longer analysis than usual.. but that’s it folks.. my half cents.. hope to see you on Monday.. enjoy your weekends..