Jan 22 2021 0
The dollar retreated slightly while demand for risky currencies surged amid hopes of massive US stimulus measures rising as President Joe Biden owns the White House. Mr. Biden signed a series of executive orders that reversed Mr. Trump's policy. Specifically, President Joe Biden on Wednesday announced the US return to the Paris Agreement on Climate Change, the focus of a series of executive orders aimed at restoring U.S. leadership in countering global warming. The EU said bloc leaders agreed that the blockade measures may need to be strengthened. The ECB kept its interest rate policy unchanged and said it was looking for a new metric for stimulating decision-making. The US application for unemployment benefits continues to rise, with 900k last week.
Price broke the support zone 103.6 and completed the head and shoulder reversal pattern we are observing. Currently, the price is testing this broken zone. We keep keeping our previous short positions and narrow the SL to stay above the trend line to reduce risk. The original price target is still 103.
As warned of the weakness of the sellers, the price has not made a new low, but is continuing its upside correction. Again it is recommended to exit short orders if there is any remaining. If the price breaks down by 1.215, a double bottom pattern will be completed. The price can easily reach the 1.225 zone. The price action here will give us the next clue.
The price is showing signs of breaking the 1.37 level, which is completing a triangle pattern and continuing uptrend. Ranging traders, following previous bearish signals, could have been stopped if the Stop Loss was too close. However, the breakout force is quite weak, so it is not excluded the possibility that the price will create a false-break, ie there is a bull trap around this area. Trend traders should not enter the order with standard volume, but only probing. When the sellers show more dominance, we should consider adding positions.
Price lacks assertiveness when breaking the support zone 1.265. A doji was formed around this price zone on the H4 chart. A noticeable bullish pinbar also appears on the daily chart, so the possibility is that this is a bear trap and the price may go up again to the 1.27 zone. Trend traders should not be in a hurry to trigger short orders. Current market conditions are more suitable for short-term reversal traders.
Selling pressure is increasing again around the 0.78 zone. We will keep the old tactics. You may consider probing short orders, but only enter enough volume when the price 0.77 is completely broken. In case the price keeps going up and successfully breaks the 0.78 level, we should temporarily abandon selling strategy.