Jan 05 2021 0
The first session of the year saw considerable volatility, not disappointing. These new developments have brought about remarkable changes. Check them out to choose the most suitable forex trading strategies.
- Britain is rushing to vaccinate its people faster than the United States and the rest of Europe, being the first country to launch the vaccinations of Oxford and AstraZeneca. Prior to that, they also rolled out a Pfizer vaccination last year.
- The dollar weakened earlier this week, lacking traction amid expectations that US interest rates will remain low for a long time while hopes of global economic growth intensify as vaccines Covid-19 is released.
- Oil prices hit multi-month highs at the start of the week on expectations that OPEC and its allies could limit production to current levels in February.
What we are concerned about has happened. The price created a perfect bear trap around 102.9, creating a spinning pattern on the daily chart, causing traders to continue the downtrend. And as mentioned in the previous session, in case of a bear trap, short-term reversal traders might consider buying up. The first target will be around 103.6. A more cautious person can wait until the top of the spinning pattern is broken. The target then would be around 104.
After the strong bearish engulfing signal (on the daily chart) accompanied by a bull trap, the price tried to go up and re-tested the 1.23 high, but again failed and created anotherstrong bearish engulfing pattern on the H4 chart. These price action shows that the selling pressure around 1.23 is very strong. Price is unlikely to surpass it in the short term. Trend traders suspend buy orders. Short-term reversal traders might consider short positions. Pay attention to the area 1.2215. If this zone is broken, the Double Top pattern above will be completed and break the upside channel line. Short positions may then be considered.
The price failed to invalidate the spinning top pattern and then fell sharply. It has now dipped below the high of 1.362, suggesting a false breakout and a further downside possibility. However, in terms of signals, we have not seen any convincing signals in favor of sell orders, so it is discouraged to trade GBP.
The 1.27 zone was not completely broken, but instead was a false break and the price rebounded sharply thereafter. The buying pressure is pushing the price up to retest the important 1.28 zone. In case it crosses this level, you might consider buying orders with a target at around 1.295.
The price has created consecutive reversal candlestick patterns, and at the close we added a Double Top pattern on the H4 chart. These signals are favoring short-term reversal traders. You might consider short positions to the 0.760 zone, around the lower boundary of the upside channel.