This week I plan to not take any huge risks. Mainly because there is a UK bank holiday on Monday and non farm payrolls Friday. I would like to get in a trade Tuesday and be out for Thursday. This means I will be looking for a high probability but short term move.
My analysis will still be based on the higher timeframes however as this is where the highest probability trade ideas are formulated.
I have started with the USDX weekly chart which shows a number of bearish weekly order blocks have been respected. The USD index is now in a position where it looks like it has broken the lows of the long consolidation we have had for the last year.
I will be watching this closely in case of any turtle soup scenarios but maybe non farm payrolls will be the catalyst in sending this pair down toward my first bearish target of 89.55.
If we see signs of buying in the dollar the first target would be to get to the first bearish order block between 94 and 94.50.
I am therefore bearish on dollar going into the week which means I am BULLISH on foreign currencies.
This is the daily chart and I have added this to show a breaker marked in red. This is the down candle before the upmove which took out the stops running into the bearish weekly order block. If dollar continues to be bearish we may see a run up to here for Tuesday, creating the high of the week before continuing lower.
I will next look at the EUR/GBP.
This shows that over the last 3 or 4 weeks EUR/GBP ran up high and took out a series of weekly stops before reacting at the Weekly bearish order block above these and respecting the 50% level. This is a classic high probability trade. Taking out stops into an order block.
Price has ran down fast but has shown signs of a reversal last week.
Looking at the EUR/GBP chart on a smaller time frame we can see how the smart money reversal ocured at the 50% level (from higher time frame chart above). It created a reversal pattern where the second part of the reversal respected the bullish order block rather than turtle soup the lows.
Price is now running up but has several layers of resistance up ahead. I do not think price will run back up above the weekly highs as that took a lot of liquidity. I think price will come unstuck in the area which has a combination of Weekly order blocks, daily breakers and 4 hour order blocks all bearish.
If price pulls back early in the week I will look for bullish euro up to the level of the 4 hour breaker.
A bearish dollar and a bullish EUR/GBP means that I should be looking at longs this week in the EUR/USD pair.(EURO STRONG VS DOLLAR WEAK)
Here is the weekly chart and to me I see a Market maker buy profile. I have added a no demand/supply indicator here just to confirm my views. Basically this indicates falling volume on candles (must be less volume than the previous two). It is from the Master the Markets book/pdf by Tom Williams and I have noticed that as price falls into a order block it does so at reduced volume. I think this may be great to incorporate/help validate my views especially at Weekly order blocks for big moves and its something I am going to keep tabs on.
I think the weekly bearish order block marked in silver should be the next target. Price created some new highs during the long consolidation before running back to the order block at the initial point price stopped falling.
On a Daily chart I have noticed that price falls back to lowest order block when it has been in a consolidation. This chart shows that key bullish order blocks have been respected and new short term highs. If we do get a bearish dollar this should see this pair start to break the 3 highs marked on the weekly chart and run higher.
I will be allocating 1% risk to this trade.
This breaker is the area I would be looking to buy from should price pull back on Monday. This is the bullish candle before the move down in bullish order block where stops were taken.
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