EUR/USD This Week

by 13:14 0 comments
Wow, that was a pretty amazing move yesterday wasn't it?!

It has been quiet here this week so thought I'd offer up some charts and thoughts on EU for the week and the two trades i've taken.

We'll have a look at the two charts together, the HLC chart and of course the PnF chart. The green zones on the PnF chart are the high volume zones carried over from the 1hr HLC bar chart and aren't indicative of the cumulative high volume spikes that you can see on the PnF chart itself. That's a post for another day and something else i'm looking into at the moment.



[b]A.[/b] The upper marked volume zone on the PnF chart is from the 3rd Jan and was selling when it printed on the HLC chart. The subsequent bars didn't manage to break the 50% and we continued pushing down. In fact, the PnF chart printed a small No Demand three box reversal, this reversal isn't marked but is visible as the column of X after where the zone starts on the PnF chart.

Looking at the PnF chart now. After just missing the downside target of 2970 before NFP last Friday we pushed up on high volume at A and just pushed through the 50%.

[b]B.[/b] This is the reaction to the push up at A, we retrace over half of the A column on good volume. There were no signs of no supply or no selling pressure. Notice how the 50% of that 6th Dec zone stopped the down move. Just below this we now have the NFP zone with the high at 1.3044

[b]C.[/b] This was my first trade of the week, after B pushed down and out of the 3rd Jan zone we printed a ND three box reversal. I set an order on the low of this and was taken in as D pushed down. At this point in time i'd forgotten that the NFP zone was right below us. Ideally I wouldn't have taken this trade with that in mind. If that zone hadn't been below I think it would have been a nice area to short. Good set up in the wrong place. Entry was 1.3050 with a stop at 1.3100 above the ND.

[b]D.[/b] D pushed down on volume less than the previous few bars and stopped right on the high of the NFP zone, at this stage I'd remembered the NFP zone was there so I thought we might be seeing signs of No selling pressure. In my mind, zones and areas are made to be broken so I decided to keep the trade running.

[b]E.[/b] E pushed up as the reaction from the top of the NFP zone, but this was on lower volume again so I took this as NBP and decided to keep the trade open.

[b]F.[/b] Another attempt at breaking through the NFP zone. Once we had reversed three boxes from the high of E this allowed me to tighten my stop a little to 1.3090. We reversed a further box which was the same level as the low of D. NFP zone was being respected again and it was at this stage I should've bailed on my short trade.

[b]G.[/b] I didn't bail and with the help of EU news we pushed up and away from the NFP zone and I was stopped at 1.3090 for a 40 pip loss on my short trade. I didn't have time to even think about this as the box that stopped me out at 1.3090 actually formed one of my favourite signals A staggered triple top with the middle column one box lower than the outer two. You can see it highlighted in the green shaded area with red outline (poor colour choices, sorry!) You can see a few others dotted around the PnF chart, with two near the high.

I went long at 1.3100 and as we all know, the market shot up. It's one of the longest PnF columns i've seen in ages. I trailed my stop at 40 pips as we climbed. 40pips = Reversal amount (three boxes / 30pips) + breathing space.

Technically speaking I should still be in the trade but A. we hit the upside target at 1.3240, B. there are three tops to the left and C. whilst it had little regard for any of the upper zones I decided to set my target a couple of pips above the highest zone at 1.3276 which was hit this morning just before I got up.

You can see a small three box reversal on the chart at the right edge. As I type this the market is back up at the high of this zone around 1.3275. If we hit 1.3280 this will mean another reversal and new column of X. Which will mean the three box reversal of Os is a No Supply. So I might try a sneaky long for 10 / 20 pips.

A quick look at the HLC chart now, I've marked all the zones that i've talked about and marked a few areas in yellow boxes showing the movement between these zones. There are many more hits as you can see but I marked the important ones. The reactions to the NFP zones etc. The price action from 2 to 3 indicates the ND at C from which I took my first trade, the short. This is what I love about PnF, it cuts out a lot of the noise in the market.

Phew, long post.



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