The daily shows price consolidating before next move. See charts below
1M: Last two months, extremely bearish price action. At support, but continuation would be expected. Potential for pullback or retracement.
1W: End of November, I was expecting a retrace and continuation uptrend (arrow with "X"). Did not occur. 2nd week of December invalidated that analysis. Now, support is currently holding and USDZAR looks oversold. It could retrace and retest the support, or this could be a brief pause (without any meaningful retracement) before bears continue to drive price down. There is a lot of room to the down side after this support zone.
Bottom Line/My Expectations: - I expect the down trend will continue. - While there could be a pronounced retracement, I'm not going to anticipate one. Confirmation and a very favorable R/R would be required to go long. It would also be a short-term trade. - Another short-term long trade would be a bullish reversal candle(s) in the bottom of the consolidation area (~12.298 - 12.241) - Anticipating a consolidation breakout to the downside is on the table. In fact, if i would have caught it 1-2 hours ago, that would have been a nice short entry. It would have allowed a 1/1 R/R if price got stopped at support and allowed for a tremendous entry point if support failed.
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Open a modest short position based on last bullet point above. Price climbed back to a point where the R/R (if exiting at bottom of consolidation area)was a little better than 1/1. Significant gains would be experienced if support fails. Whether there will be an actual pullback or down trend continuation after this consolidation has not been determined.
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TP hit. Nice profit.
Didn't have time to do an analysis, so decided to close entire trade until I am able to take a step back and evaluate the next move. Most likely it will be short entry after a pull back.
@invinci, That's the million dollar question. And when it is overdone, will it pull back, have a full blown correction, or reversal. We'll only know for sure after the fact. With that being said, the price action has been extremely bearish. It has crushed support after support. All of those supports are now resistances. Since the end of December, it's been in a controlled consolidation. That doesn't scream overdone. The market will tell us when it is overdone.