EURUSD Confirms Weekly Reversal Pattern

by Justin Bennett  · 

November 16, 2018

by Justin Bennett  · 

November 16, 2018

by Justin Bennett  · 

November 16, 2018


Yesterday I warned about being short EURUSD. The price action below 1.1300 and subsequent close back above it was indicative of euro strength.

I didn’t know it would lead to an 85-pip rally on a Friday. But I wasn’t surprised by the sudden late-week move either.

So what was it about the sub 1.1300 price action I didn’t like?

The aggressiveness of the November 13 bounce was the first red flag. It’s why I alerted members to the possibility of a close back above 1.1300 before it happened.

Here’s the comment I made in the member’s area three days ago:

Comment inside the member's area

The 75-pip rally on the 13th led to an immediate retest of 1.1300 as new resistance.

That was the second red flag. An immediate retest of new support or resistance (as opposed to a rounded retest) often leads to a false break.

As you can tell, this time was no exception.

Last but not least, Wednesday’s close back above the 1.1300 handle was the third warning sign for shorts.

I mentioned yesterday that the key area could be as high as 1.1310. But that level was also taken out with Thursday’s 1.1325 close.

The way I see it, Thursday’s close was enough to turn at least slightly bullish. Combine the other factors I just discussed, and you had every reason to buy EURUSD.

In fact, that’s exactly what I did.

I entered long at 1.1335 Friday morning which I shared in the member’s area. Luckily, I got my order in just before EURUSD surged higher by 80 pips.

But don’t worry. Chances are you’ll have other opportunities next week if you missed Friday’s move.

For instance, a look at the weekly time frame shows a 200-pip bullish rejection candle.

EURUSD weekly bullish candle

I discussed the possibility of such a pattern in yesterday’s post. Friday’s bullish close made it a reality.

All eyes will be on 1.1430 next week. If buyers can take out the resistance level on a daily closing basis, it will expose 1.1530 and perhaps 1.1620.

Click here to get access to the same New York close charts I used to detect this week’s EURUSD breakout.

That means if you aren’t already long at a much lower price, you’ll probably want to stay out until 1.1430 is breached.

Otherwise, you risk taking some heat should the pair pullback from 1.1430 next week.

You could, of course, look to buy on pullbacks. Perhaps around 1.1350 if it retraces that far. Just keep in mind that I do expect sellers to put up a good fight at 1.1430.

The euro needs to hold above 1.1300 for buyers to have a fighting chance. That’s the proverbial line in the sand to keep this rally alive.

In fact, I’d argue that even a simple retest of 1.1300 would be a somewhat bearish sign. I wouldn’t want to see EURUSD give up all of Friday’s gains.

For now though, buyers are in control. So until the price action tells me otherwise, I’ll approach EURUSD as a short-term buy.

Important: I use New York close charts so that each day closes at 5 pm EST.

Click here to get access to the same charts I use.

EURUSD support and resistance on the daily chart


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35  Comments

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  1. Last week i had cut loss when the price moves to bear trap…
    Now i gain back the cut loss….
    Thank you for thursday analisa…

  2. Hi I thank you for all this good information
    About Me , I ‘think its a Fake Price Action ….Strong possibility Of Continuation Signal because on the Weekly Frame we have an Wedge Broken on 1.17600 -1.18600 area , now the price Search a Reel Major Support so the e price on The Zone of 1.14330-1.14470 its the same zone that price will touch the Downtrend-line (4h Frame) so pullback ? or Breakout ? if Pull back it was clear the price continue to 1.11580 /1.10/1.09700 if Breakout it means that the moment to Correct on Daily Frame.
    Will see soon
    Thanks

  3. While recognising the bullish price action on the support, I still treat this pair as a counter trend rally on the weekly chart like before on week starting 27 May 2018 and 12 Aug 2018 since the dominant trend is still clearly down thus the upside could be limited. I look for short opportunity only in a down trend, if any. Otherwise, I would rather wait until trend changes.

    1. Cheers, Peter. It’s certainly counter-trend. I’m not arguing it isn’t. But that doesn’t mean we won’t see rallies.

      The last time we saw four straight days of gains after an impulsive selloff was in the third week of August. That was a 500-pip rally. I’m not saying that will happen again, but there are undeniable similarities.

  4. The dollar index is showing signs that the USD might be weakening. On the 4 hr chart it closed below the 50ema & it’s closing in on the 200ema. It closed 43 pips below the 50ema, & it’s only 28 pips from the 200ema. Also previous price action shows that price has been trying to breach the 50 ema on multiple occasions, a sign maybe that price wants to fall. The daily chart also confirms it as the 50ema is almost aligned with the 4hr 200ema. If this goes to plan then the Euro will gain strength, a sure sign that EURUSD will be going up. My theory anyway.

  5. Justin I so love ur analysis as they are more into candlestick details such as when the bears broke the 1.1300 mark and made a new lower low but I was intrigued but how much buying pressure came from the buyers once they reached the 1.1210 mark,candlesticks tells us the story that’s hidden,I myself didn’t go short because of the bullish power that I saw

  6. Thank you Mr Bennett, although I have notice the bullish sign of EUR/USD since Friday and I took a shot from 1.13620. I think that bull will continue this week till 1.14445 before anything like reversal.

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