Fib extensions and retracements

Fibonacci Trading

 Fibonacci retracement and extension levels

1 hour  Fibonacci Trading

Today in the beginning of the European session the Euro moved up to the 100 % fib extension (1-2 at 3) and daily R1 at 1.2548. The Euro struggled with this resistance level although EUR/USD moved up close to the weekly pivot point (1:35 p.m. GMT, 4). However, EUR/USD failed to close above this resistance zone (1.2548) on the hourly basis so that market moved lower (1:35 p.m.) to find some support at the rising hourly 10 SMA (red line-5). From there, the Euro strongly moved up above the prior resistance zone at 1.2548 (second test) and market was able to close above the weekly pivot on the hourly (second test) and 4-hourly basis (candle close at 4 p.m.). The hourly candle (3-4 p.m.) approximately closed at (respected) the 61.80 % retracement and daily R2, which in the following got broken with the beginning of the next hourly candle (4-5 p.m.) and the Euro moved up to the 100 % fib extension at 1.2603 (6).

5 min Butterfly sell pattern

Fibonacci Retracement at 61.80 %

On the 5 min chart we see that the Euro very often reacted at the 61.80 % fib retracement marked with the 0 on the 5 min chart and also at the 100 % fib extension market with the 1 on the 5 min chart (important Fibonacci levels). At the beginning of the London trading session at 9 a.m. the Euro made a abc retracement before market moved up to the 100 % fib extension at 1.2554. In the following market formed a typical 3-wave consolidation pattern/ butterfly (circled). After the termination of the consolidation the Euro reached the typical butterfly target (127 % fib extension-1-0 at 0) before EUR/USD reversed and took out the low of the prior consolidation (1.2526), which is also typical for a butterfly pattern. The Euro found support at the 10 SMA on the hourly Chart (2-3 p.m.) and formed a kind of ending diagonal on the 5 min chart (ED). In the following, the Euro strongly moved up to the 100 % fib extension, where market consolidated.

Pivot Points as Support and Resistance

Flag pattern and Pivot Points

Bear and Bull Flags

1 hour Daily Pivot Point S/R

In the Asian session, the Euro found support at the weekly S1 and market formed a kind of doji/ pin bar (reversal candle) on the hourly chart (Yesterday's low-blue line). From there, the Euro moved up to the 20 SMA (hourly) where market found some resistance (5 a.m.) (1) before market moved above the 20 SMA up to the daily pivot point at 1.2522 (2).

Daily Pivot Point Trading

The Euro reversed at the daily pivot point and market targeted the recent hourly low at 7 a.m. to clear some stops (3) (no breakout confirmation of the hourly low on 5 min chart) before the euro moved up again and penetrated the daily pivot point (4). However, we see on the 5 min chart (B) that market never confirmed a break of the daily pivot point (no close above the breakout candle).

Market rolled over at the daily pivot point and targeted yesterday's daily low. Yesterday's bearish daily candle made a retest of this low very likely (bearish sentiment) and many stop and limit orders are expected to be below yesterday's low. Market cleared these orders and bounced back and closed again at/ above the weekly S1 on the hourly chart (first breakout is often a false breakout).

On the 5 min chart (below) we also see that the breach of the weekly S1 and yesterday's low did not get confirmed. The 5 min candle at 3:05 p.m. closed at the weekly S1 (respected it) and the following breakout candle penetrated this support level, however, there was no succeeding candle which closed below the range of the breakout candle. Moreover, market bounced back at the 100 % fib extension from C-D at E.

Today's price action in the European session might be seen as a Head and Shoulders pattern (ABC) with the green line as its neckline (5 min chart). Market formed a nice 3 wave consolidation pattern at the neckline (visible on the 1 min chart-bear flag) just prior to the breakout (D)

5 min Flag patterns

On the 5 min chart we also see that the Euro bounced back after the unconfirmed breach of the weekly S1 and yesterday's low (blue line) (F), moved up to the 20 SMA (3:45 p.m.) where market consolidated before the Euro went up further and formed a bullish consolidation (bull flag). The green neckline seemed to provide some resistance. The bull flag got triggered, supported by the rising 20 SMA on the 5 min chart and market moved up again.