On Monday I pointed out a wedge pattern that had developed on the EURUSD intraday chart. And last night, less than 48 hours from the time I released that commentary, President Trump took center stage.
While the event didn’t produce the kind of volatility I expected, the U.S. dollar was more active than usual for the Tokyo session. One such spike brought the EURUSD right back to wedge resistance that extends from the February 17th high.
I entered short on this retest and held through yesterday’s bounce. Ironically, I had initially set my pending order for 1.0590 but moved it two pips lower to have a better chance of getting filled. I’m glad I did because the order was filled by a fraction of a pip.
You may have noticed that the pair broke higher before reversing ahead of Monday’s close. This false move is what caught my attention. In fact, I wouldn’t have been interested in trading it otherwise.
Why didn’t I buy the pair on the 4-hour close above wedge resistance?
The last sentence of Monday’s commentary explains my reasoning.
I’m not interested in buying the Euro given the bearish momentum that’s been in place since mid-2016.
This is why establishing a directional bias is so important. The momentum has been bearish for more than six months, so I only want to look for selling opportunities from resistance.
From here I’ll be interested in adding to the short position on a daily close below 1.0520. This area has been the bear’s nemesis since the February 15th retest. The region has also been a key factor since November 24th of last year.
A daily close below the 1.0520 handle would expose the multi-year lows near 1.0370. Perhaps now is also a good time to mention that my long-term bias from September of 2015 is very much intact.
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