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DISCLAIMER: I am not a financial advisor nor certified analyst and definitely not a pro trader. All contents discussed on this blogpost are solely my own personal views and for Trading education/entertainment purposes only. Forex/FX Trading is extremely risky where losses can exceed deposits. Enter with discretion. Do your own research and due diligence. The basis of this trading analysis is purely technical in nature.
Today I am going to create my latest Forex technical analysis here in the amazing trading platform, Finlogix, where we can create unlimited backtestings and forwardtestings for all our trading plans across the global markets where a lot of investment instruments to choose from. I decided to focus my mind in one of the most traded and liquid FX pair considering its daily trading volumes, no other than the EURUSD.
As a start, the EURUSD’s 2021 yearly high last January 6-7 double top candles is my trend setter and the basis of writing this technical analysis for the said Forex pair trading pair.
We can see clearly that the Euro is struggling against the Greenback in the last 5 months at least after it printed its second yearly high last May 25-26 which is our second double top.
Let us connect the two yearly highs and they will form a descending channel in the daily time frame and as well as higher lows in the process.
Back again on the EURUSD’s daily chart, I can see that the FX pair is still in the Elliot corrective phase C as part of the ABC correction. The phase C is usually the longer one to finish the corrective process.
In addition, I am also seeing a mid-long term inverse Head and Shoulders formation in the daily where the shoulder number one first formed on July 2017 breakout rally and ended somewhere in October 2018 wherein the EURUSD suffered a decisive breakdown. The neckline of the said inverse H&S is the 50% Fib extension level in reference from EURUSD’s December 2016 low to February 2018 high. The second shoulder’s start of formation can be spotted last July 2020’s beautiful break out! But so to speak it can be retested this time as support completing the neckline I mentioned earlier. Anything can happen but in my own personal speculation, in this way we can surely say that corrective phase C will end soon. Just give it more time.
Let us go ahead with my EURUSD trade plan, I have already explained the technicals, so I will lay out the details.
The neckline will be my entry for a long position which I am convicted that EURUSD will enter a new re-accumulation phase based on Elliot’s wave theory in trading. It is 1.14500 to be precise. I will put the stop loss within the inverse H&S’ range bounds. It is the 61.80% Fib extension level (please read again the details of my inverse H&S formation above for a recap) around 1.11850. I am forecasting that the Euro will create a third higher low (HL) near the 23.60% Fib extension level as a good taking profit exit at the 1.20300 mark.
The risk:reward score for this long trade plan is approximately 2.19.
Good luck! Thanks a lot for reading this analysis.