The daily chart of the EURUSD has broken a key four month trendline. That’s news in itself.
However, there is more going on with this move. Let’s take a look at the daily chart with the obvious downtrend line drawn:
EURUSD with trendline and MOB
Note that I’ve drawn the lower MOB (Make or Break) line and a pivot MOB. Here’s how it works. If you take the low at A and draw the MOB line off of it (thanks to e-Signal’s Advanced GET platform); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES you get the lower blue and pink line. The way that MOB’s work is that they give you a potential projection for the market both in terms of price AND time. That last part is what makes them interesting. The two little black hash lines inside the MOB line give you the ideal window where this price would hit, but the main point is that the projection is for the length of the line ONLY and not beyond.
So the MOB calculation from the low at A gives us line C. Note the intersection of that line with the downtrend line that I’ve drawn in black. The EURUSD broke that trendline to the upside, but then retraced down to not on retest that downtrend line from above, but also hit the MOB just ahead of the ideal window. It hit it to the pip and reversed hard on Friday.
This means that the EURUSD has broken a key trend and retested that trend, turning what was resistance into support. What happens from there?
Well, we need to start thinking about an upside target for the EURUSD on this next move. This can be accomplished by drawing the MOB from the most recent pivot high, which is point B. This gives us the line at D, which is a fairly large MOB line. Again, however, we focus on the space between the two little black lines on the MOB as being the ideal target timeframe, which would put us about 600 pips higher in just over a month. Obviously, the market can go up and down during that move, but there is a better than average chance that the MOB will be hit in that area, so trading strategies to the long side on the EURUSD should be given priority.
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