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Macdivergence

Long-term EUR/CAD Analysis - Trend Lines!Today we have some supplementary analysis to my recent EUR/CAD divergence setup (see the Related Ideas below). If we zoom out and take a long-term strategic view of the market, some interesting areas jump off the chart: Firstly, there's a long-term rising trend line (price based) that is formed by lows in August 2012, April 2015, and to a lesser extent February 2017. Price is currently sitting on that trend-line. Which isn't to say it's definitely going to move upwards, but markets have structure all over the place, and it's a silly trader who ignores strong them. Secondly, there's a long-term horizontal support/resistance line formed in the region of 1.4900 - 1.5000. (remember that it can vary by a fairly big margin). Price has reacted to this level consistently over the last two decades. Which isn't surprising as it sits at a major round level. But that's a level that would need to be breached if price does start moving upwards. It could potentially be a good take profit level to exit the market and see what happens in the short-medium term. Thirdly, there's a short-term falling trend line formed by the market highs in March and December 2018. Given that it's a shorter-term trend line, it doesn't take absolute precedence. But should price reach that level again, it's highly likely the market will react in some way. Lastly, there are some interesting trend lines formed by taking a broader look at the MACD indicator. It's a useful trick, and one that few traders employ well, but it can be quite profitable and effective if done right. The problem is identifying what is a significant trend line, and what isn't. I may do a post on it one day (if anyone's interested!) but my general rule is that it needs to have 3 touches (standard for a trend line), and for a MACD trend line break to signify a market reversal, you need to have a MACD divergence shortly before the line break. It's not perfect, and the higher time frames are better, but it's a good tool to add to your arsenal. EUR/CAD had a nice bounce Friday before selling off near the close. The quick buying pressure was a good sign, and call me crazy but I think the Euro may begin to reverse now - which would be good for this trade. However, the market may try and shake out some buyers before moving up, so be on the lookout. Alternatively it will just plunge through all structure and fall to the floor - who really knows! :) Update: in fact, if we lower the trend-line to go from the 2015 lows, rather than the closes, that coincides with 1.4500 S/R, which has been validated over the recent years. That also potentially gives us a bullish MACD/momentum divergence as well.... Interesting. Good luck! DD
Long
by DreamsDefined
1
Will GBP/USD Breakout the Support? Or, it Will Rise Up From TherA Confluence of MACD Divergence in W1 Chart and Fresh Demand in H1 Chart If we look at the W1 chart of GBP/USD, we can see the price just arrived into support zone. The source of this support is a demand level from April 2017. In December 2018 the price tested this demand twice, and now, it's the third time the price reaches there. A demand level that tested a few times becomes a support zone. Still in the W1 chart, we can see a significant divergence between the MACD indicator and the price lows. While the price creates a lower low in the W1 chart the MACD creates a higher low. In the H1 chart, the price created a fresh demand two days ago which is a great demand for buy position. The target for this buy position is 1.2680. If the price will breakout the demand there is a high probability it will break also the support on the W1 chart. In that case, the price most likely will tend to reach the support at the bottom (support 2 at the picture). This situation can create an opportunity for a sell position and we should look for a price action setup for sell position. The confluence of MACD divergence on W1 chart and a fresh demand on the H1 chart, convince me that the price had a great chance to rise up from the demand. But, it always better to be ready for another scenario. This analysis is relevant for long term forex traders.
by the5erstrading
The Reason Why it’s Safer to Trade against CompressionToo Risky to Sell EUR/CAD with this Supply Above? At any time frame, the EUR/CAD seems to be in bearish momentum. In the H1 chart, the price is in a downtrend of almost 300 pips. While yesterday a fresh supply was created by the price above. Most of this downtrend was a compression which meant that the price compressed down while picking up all the sell orders along the way. Compression indicates a powerless movement in the price. In other words, it seems the last downtrend of the price was powerless and it’s safer to look for a reversal signal and trade against the compression. Usually, a supply level is a great level for a sell position, but this supply is created after the price had already decreased about 250 pips and divergence has occurred between the MACD indicator and the price. So, instead, I will use this supply as a confirmation zone and not as a level of sell position to sell this supply as is too risky now. If the price will break out the supply, it will be a signal for reversal opportunity and we should look for a price action setup for a buy position. Breaking out the supply above will change the momentum in the H1 chart from bearish to bullish.
Long
by the5erstrading
1
Oil Continues Down Although Large Crude Oil Inventory FoundA significant Divergence Between MACD and Price Highs. Yesterday, the OPEC succeeded to extend their agreement to cut production until 2020. Also, The American Petroleum Institute (API) declared that they had found another large inventory of crude oil. Despite this good news USOIL price continues down. In the H1 chart, there is a final drop from yesterday, which has now changed the bullish momentum to bearish. The change happened after a significant divergence between the MACD indicator and the price highs, while the price created a higher high the MACD created lower high. This change indicates that the downtrend has probably just begun and that we should look for an opportunity to sell USOIL. It seems the price tends to reach 52.00 zones. For now, the correct level to sell USOIL is at the supply above and then the target should be at 52.00 zones which is the demand below. This demand is also a great level to buy USOIL as a long term position. If the price breakout the demand and continues down, it indicates that the long term momentum has also changed to bearish.
FX:USOILShort
by the5erstrading
3
Three Reasons to Believe GBP/USD Remains BearishGBP/USD Price is Established Below The Annual Open Price A few weeks ago, the GBP/USD price fell below the annual opening price, which became a significant resistance zone. Since the after three unsuccessful attempts to breakout this resistance. The price reattempted to break the resistance against two days ago (25th June 2019). This time the daily candle ended as a bearish outside bar candlestick pattern, by engulfing the candle of the day before. This candlestick pattern is the first signal to look for a sell position. In the 1H chart, there are two more signals to look for a sell position on GBP/USD. The substantial divergence between the price and the MACD indicator – while the price creates higher highs on its way to reaching the resistance, the MACD creates lower highs. When the price hit the resistance, then dropped down and created the outside bar pattern, it also creates a fresh supply, which is the right level to open a sell position if the price retraces there. The three reasons that we think the GBP/USD remains bearish is because of the confluence of – bearish outside bar pattern, fresh supply, and the MACD divergence which create a reliable and strong setup for the sell position. In the 1W and 1D charts, it seems that the price will remain bearish until it reaches the 1.2150 zone, which is a support zone. Therefore, this support zone will be the target of this sell position. This analysis is relevant for swing forex traders.
Short
by the5erstrading