Dec 14 2020 0
There were really big events at the weekends, which leads to huge gaps on today's charts. Let's analyze them and find the most suitable trading strategies.
- The United States will launch the Covid-19 vaccine in the week of December 14.
- Brexit has not reached a new breakout, discussions will be resumed in the new week.
- The Bank of England (BoE) has taken steps on Friday to keep its lending program to banks until 2021 amid the UK's struggles with Covid-19, they also stressed that will be willing to deal with any disruptions arising from a major change in British trade relations with the European Union.
- European Central Bank President Christine Lagarde has "brokered" a tough compromise to secure support for a new package of measures against the effects of the pandemic. However, the battle to convince skeptical policymakers has only just begun.
The price has not approached the range bottom as expected but is still stuck in the accumulation area of the triangle. Range traders that have sold on bearish signals (bull trap) from last week should consider exit or move Stop Loss to reduce risk. Only consider adding short orders when the 103.6 zone is broken. The price target will then be around 103.2.
The bullish Pennant pattern we observed has been completed. However, the price level activated at 1.218 is still holding, so we cannot enter ‘long’ orders. In terms of weekend price action, it once again failed to break out 1.218. The pattern on the daily chart is not a strong bearish pin bar, but it is sufficient to show that the selling pressure around 1.218 is still strong. Currently, we should not do anything with EURUSD but continue to observe the two borders of the accumulation zone. If the price breaks above the boundary, which activates the bullish Pennant pattern, you can consider buying trend following orders. If the price breaks below the lower boundary, which forms a Double Top pattern, then reversal traders can consider short orders.
The price broke the 1.325 zone and completed a head and shoulders reversal pattern. It is worth noting that the up-gap appeared quite strong at the beginning of the week. However, the price continuously decreased after that, so we can still expect the price to go down. Who has entered the order can continue to hold and expect the price to approach the 1.30 zone.
The price re-tested the 1.280 transition zone and formed a doji around this price zone. This is not the ideal model for us to enter new short positions. However, compared to those who entered the breakout order before, this is a much better price, so it is still possible to consider adding new orders. Place Stop Loss above the area of 1.285. The target will be around the 1.26 zone.
Price appears to be making a false break with a bull trap, as evidenced by the extremely strong pin bar pattern on the daily chart. Those who entered a long order before should consider exiting the order early because there is a high probability that the price will correct after this pattern to retest the 0.745 zone.