Around eight hours ago I entered long on the EURUSD. As hoped for, a 1-2-3 revesal pattern developed in the weekly and daily take profit zones. Entry was exactly at the Monthly M2 (a coincidence) :
Fortunately I did not move my stop loss up to breakeven as soon as possible, because price came back down to test the M2. The price then went up 80 pips.
On the 1 hour chart we see that price broke through the historic area that I thought would present the bulls a lot of challenges. The 21 and 55 EMAs are behind us:
On the 4 hour chart we see the 21 EMA has been broken. The 55 EMA is a potential challenge:
In this scenario the market just goes to sleep awaiting the Italian Election. If this happens I will follow my original trade plan from last Monday, which is to hold my long position into the weekend, with stop loss at breakeven. This is my risk-free play on a post-election rally.
If price sinks back to levels of yesterday and takes my position out at the monthly M2, it will be evidence that the bears are still in control. I may cash out if the price on Friday evening is a modest distance from my entry. I will not consider re-entering the EURUSD until after the election.
If the bullish momentum from yesterday continues today, we might see a challenge of the weekly central pivot. This is also the area where the daily take profit zone and historical resistance converge. Price may just bounce around the 1.2300 to 1.2340 range for a while. In this scenario I would strongly consider this a long-term swing trade, as bulls might even survive a negative EURUSD reaction to the Italian election results.
(end of post)