Personally, I thought it might drop. Generally, Forex always does the complete opposite of what I expect.
Looking at the daily EURUSD chart above, I've drawn a Fibonacci retracement line from the big move down from October last year to January of this year. If this current move up is a retracement from that move, we'd be expecting it to hit the 61.8 retracement line at about 1.36270.
Here is the daily EURUSD chart with Ichimoku Kinko Hyo plotted on it:
See how price action consolidated right through the cloud? The breakout occurred just as price action exited the cloud.
I haven't been using Ichimoku Konko Hyo for my analysis, but it's interesting to look at.
If I were to try and forecast EURUSD price action, I'd look at some other currency pairs as well, such as GBPUSD, AUDUSD, and USDCAD. Some of these don't look too lively right now (not shown) which makes me doubt continued EURUSD momentum. However, since I doubt it, it will be going up.
Look here, a doji!
This doji, highlighted in yellow on this 4 hour EURUSD chart, can mean a reversal signal. At least in the short term.
From the first chart of this post, we can also see price action has also broken through the upper Bollinger Band. Rarely does price continue past these bands on the daily chart.
I could continue posting supporting and contrary technical evidence about EURUSD price action all day until we all just want to get drunk and pass out.
Lately I've been demo trading a break-out strategy, that looks for consolidations and places pending orders above and below. With the EURUSD doing strange things lately, this strategy hasn't been working out so well. With some movement back again, however, we can try again.
Here's a nice consolidation pattern high-lighted in yellow on the 15 minute EURUSD chart:
We'll place trades and see how it works out tonight.
The advantage of this break-out system is that we don't have to try to forecast (or guess) where the EURUSD might be heading. We simply wait for consolidation and straddle it with BUY and SELL pending orders.
The disadvantage of this system is that we can get whip-sawed and stopped out of both of our positions. I'm hoping that this tends to happen only during broader periods of consolidation (i.e., when consolidation starts to appear on daily charts), but we'll find out.
