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Weekly Price Action & Technical Analysis Outlook | Nov 3-8
EURUSD – Unable to Hold Above 1.3800
After attempting to hold above 1.3800 for about a week, the pair sold off, likely a combination of massive profit taking from medium/long term bulls, along with Draghi comments suggesting they are uncomfortable with a high EUR. Regardless, the pair sold off for five days straight and is now sitting a key support zone if the bulls want to re-establish control. This zone marked in the chart below is between 3480-3400.
Momentum short term is bearish, so i’d want to see some intraday correction at this zone before buying. Short term bears can now look for pullbacks towards 1.3645/1.37 to get short, while bulls can watch the intraday charts for buyers holding the line before getting long. Our bias is to remain short sticking with the current momentum, especially if it clears 1.3400 with 1.33 and 1.3120 being downside targets.
GBPUSD – At A Key Line In the Sand
Also getting punished by the USD lately, the cable has sold off for 6 days straight, losing +260 pips and is currently parked on a key double bottom support level which is a major ‘line in the sand’. There is an opportunity for bulls to take a low risk high reward play buying at this 1.5900 level with a tight stop below. We’d suggest about 1/3rd the normal risk, as its against short term bearish momentum, but the upside is a min. about 90 pips with a possible return to 1.6200, offering ~300 pips for only a 15 pip stop. So definitely an option here. If you want to be bearish, then look for a breakout pullback setup towards 1.5900 to get short, targeting 1.5720/30.
Dow Jones Index – Still Bearish, But Slowed Selling Pressure
Earlier this week we suggested selling between 15720 – 15750 which worked out as the US index sold off about 180 points from the yearly high three days ago. However the buyers absorbed some of the selling pressure holding the prior daily lows at 15540. The bulls may make another attempt towards the channel top, and if they do, we’ll consider selling in our key resistance zone again, this time targeting 15550 and 15375. If the index falls below 15540, then 15375 should be up next, but we are keeping our bearish bias until there is a daily close above 15800.
Make sure to check out our controversial and poignant article on Trading Like a Sniper – What It Really means
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