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Morning Technical Newsletter EUR/USDYesterday price fall to our support area at 1.1433. Let's check fundamental view of USD.  The official level of unemployment for September in the USA has fallen to 3.7%, a level not seen for 49 years, since the time of the Hippies in 1969. The official unemployed figure, it must be recalled, relates to the number of people registered as unemployed and actively seeking work. Many economists regard an unemployment level of 5% as the functional level for full employment (but their definition of unemployed would be without a job and wanting one, which is different). The Organisation for Economic Cooperation and Development (OECD) has warned about what it refers to as people “at the fringes” of the employment market – a significant population in the US economy, according to OECD. A proportion of these uncounted unemployed (or not regularly employed) people are suggested to be victims of the “opioid crisis”, those addicted to or abusing prescription drugs. The news is not completely positive since the job creation rate for September came in below expectations at 134000 and hourly earnings increased at 2.8% in September, down marginally on the August figure of 2.9%. Usually, if the employment market is strong, wages would expect to rise as employers try to attract workers. However, revision of the July and August job creation figures were revised upwards by 87000 jobs. Jobs were created particularly in the professional and business service sector; in healthcare and construction. However, September saw a negative impact due to the hurricane/tropical storm Florence which was blamed for the loss of 18000 jobs in the leisure and hospitality sectors. Obviously, jobs will have been created in the construction and infrastructure/repair sectors as damaged communities struggle to rebuild after the storm. As yet, US job creation data has not shown any clear effects from the protectionist measures implemented by the Trump administration on exports from nations that the US regards as taking unfair advantage of sectors of the US economy.
Long
by GroundStoneHoldings
Morning Technical Newsletter EUR/USDThe price has continued to look bearish since then, being held down by another bearish trend line shown in the price chart below which has had three touches. There are many resistance levels piling down on top of the price, and the short-term price action also looks bearish, in line with the long-term trend. For all these reasons, I have a bearish bias today, but as the U.S. is on holiday there may not be a great deal of price movement. Another interesting point is the divergence we are seeing between the Euro and the USD, which is looking quite strong.
Short
by GroundStoneHoldings
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Morning Technical Newsletter EUR/USDEUR/USD: Daily perspective: The support area at 1.1479-1.1583 is still in play. Thursday’s movement chalked up a reasonably strong bullish rotation candle, though Friday’s action formed a concerning indecision formation off local resistance circling the 1.1530 area. H4 perspective: Friday’s non-farm payrolls rose 134k in September, below the expected 185k. Average hourly earnings came in line at 0.3%, while the unemployment rate fell slightly and came in at 3.7%, a tad below the 3.8% consensus. The aftermath of the US job’s numbers witnessed an immediate decline to lows of 1.1483. However, the move was a short-lived one as price swiftly recovered to highs of 1.1549: the session high for the day. Areas of consideration: Intraday, however, has the H4 candles eyeing its resistance zone mentioned above at 1.1580-1.1563. In view of its surrounding confluence on the H4, and the fact weekly price is likely to probe as low as 1.1445 this week, a short from 1.1580-1.1563, with stops tucked above its range at 1.1582, could be an option today/early week. Today’s data points: Limited data; US banks closed in observance of Columbus Day.
Short
by GroundStoneHoldings
Education post 4/100 – How to trade BUOB?What is a 'Bullish Outside Bar' A bullish engulfing pattern is a candlestick chart pattern that forms when a small black candlestick, showing a bearish trend, is followed the next day by a large white candlestick, showing a bullish trend, the body of which completely overlaps or engulfs the body of the previous day’s candlestick. Breaking Down 'Bullish Engulfing Pattern' A bullish engulfing pattern is not simply a white candlestick, representing upward price movement, following a black candlestick, representing downward price movement. For a bullish engulfing pattern to form, the stock must open at a lower price on Day 2 than it closed at on Day 1. If the price did not gap down, the body of the white candlestick would not have a chance to engulf the body of the previous day’s black candlestick. Because the stock both opens lower than it closed on Day 1 and closes higher than it opened on Day 1, the white candlestick in a bullish engulfing pattern represents a day in which bears controlled the price of the stock in the morning only to have bulls decisively take over by the end of the day. The white candlestick of a bullish engulfing pattern typically has a small upper wick, if any. That means the stock closed at or near its highest price, suggesting that the day ended while the price was still surging upward. This lack of an upper wick makes it more likely that the next day will produce another white candlestick that will close higher than the bullish engulfing pattern closed, though it’s also possible that the next day will produce a black candlestick after gapping up at the opening. Because bullish engulfing patterns tend to signify trend reversals, analysts pay particular attention to them. Bullish Engulfing Candle Reversals Investors should look not only to the two candlesticks which form the bullish engulfing pattern but also to the preceding candlesticks. This larger context will give a clearer picture of whether the bullish engulfing pattern marks a true trend reversal. Bullish engulfing patterns are more likely to signal reversals when they are preceded by four or more black candlesticks. The more preceding black candlesticks the bullish engulfing candle engulfs, the greater the chance a trend reversal is forming, confirmed by a second white candlestick closing higher than the bullish engulfing candle. Acting on a Bullish Engulfing Pattern Ultimately, traders want to know whether a bullish engulfing pattern represents a change of sentiment, which means it may be a good time to buy. If volume increases along with price, aggressive traders may choose to buy near the end of the day of the bullish engulfing candle, anticipating continuing upward movement the following day. More conservative traders may wait until the following day, trading potential gains for greater certainty that a trend reversal as begun.
Education
by GroundStoneHoldings
Education post 3/100 – How to trade inside bar?What is an Inside Bar ? The inside bar is a two bar candlestick pattern, which indicates price consolidation. In order to confirm this pattern you need to see a candle on the chart, which is fully contained within the previous bar. In this manner, the inside bar candle should have a higher low and a lower high than the previous candle on the chart. The Inside Bar is fairly easy to spot on the chart, but using an Inside Bar indicator can assist the trader in quickly finding these patterns on their price chart as well.  Psychology behind the Inside Bar Since the inside candle has a lower high and a higher low than the previous candlestick on the chart, this indicates that the currency pair is consolidating. Why is it consolidating? It is consolidating because the bulls cannot manage to create a higher high and at the same time the bears fail to create a lower low. As such, there is not sufficient buying or selling pressure to break the previous bar’s high or low. Entering an Inside Bar Trade When the price action completes an inside candle on the chart, you should mark the low and high of the Inside Bar consolidation range. These two levels are used to trigger of a potential trade. Remember, the inside candle clues us in to the eventual breakout and likelihood of a continuation outside the range in the direction the break, however, it doesn’t give us information about the direction of the breakout through the range, prior to the actual move. In simple terms, if the price action interrupts the range upwards, then you should go long. If the price action breaks the range downwards, then you should trade the short side. Stop Loss when Trading Inside Bars The usage of a stop loss order is recommended for any Forex trading strategy. The inside bar trading system is no different. You should always put a stop loss when trading inside candles. But where? The proper location of your stop loss is slightly beyond the inside candle’s top, or bottom, depending on the direction of the break. In other words, if the inside range gets broken upwards, you can buy the Forex pair and place a stop loss order right below the lower candlewick of the inside candle. The same is in force for bearish breakout of the inside range, but in the opposite direction. In this case you could sell the Forex pair and you put a stop loss right above the upper candlewick of the inside bar. Take Profit on Inside Bar Setup Projecting the potential move with Inside Bar Breakouts can be challenging. Often Inside Bar trades can lead to a prolonged impulse move after the breakout, so employing a trailing stop after price has moved in your favor is a smart trade management strategy. Along with this, I typically like to use a fixed Take Profit target at 1.5:1 or 2:1 reward to risk ratio to scale out of inside bars trades. In this manner, if the stop loss is 80 pips from the entry, then the minimum target would be located at 120 pips distance. Let’s take a closer look at the inside bar pattern on the Forex chart upside.
Education
by GroundStoneHoldings
Morning Technical Newsletter EUR/USDEUR/USD: We are still looking for potential intraday target at 1.1430 ( 110 pips target ).  Areas of consideration: A fakeout of the current H4 supply zone to bring in sellers from September’s opening level at 1.1595/round number 1.16 is a possibility today (yellow zone represents a fakeout area). A short from 1.1600s would place one against possible daily buying out of 1.1479-1.1583, though in-line with weekly flow. Given this conflicting view, waiting for a H4 bearish candlestick formation to emerge off 1.16 is recommended before pulling the trigger. For those who prefer to trade without candlestick confirmation, a safe stop-loss position, according to technical structure, is likely beyond the October 1st high at 1.1624. In the event a trade from 1.16 comes to fruition, the ultimate downside target falls in around 1.1445: the top edge of the weekly demand. Interim downside targets, nevertheless, can be seen at the top edge of H4 supply: 1.1580, followed by the minor H4 Quasimodo support at 1.1505/1.15. Today’s data points: German banks closed in observance of German Unity Day; US ADP non-farm employment change; US ISM non-manufacturing PMI; FOMC members Barkin, Brainard and Mester, along with Fed Chair Powell also take to the stage.
Short
by GroundStoneHoldings