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The Adventures of a Trader in the Forex Land (3)

Here we go further with our forex blog here, on The forex trading insight of today’s blog is quite simple – I found out a rare pattern which could be interesting for  the amateur or professional money makers.

I was looking recently on my IPhone on the EUR to USD (EURUSD) pair. Although I do not trade it, the EURUSD is the most traded pair on earth, so it meets the criteria for perfect trading – high volatility, liquidity, accessibility 24 hours. For me, the EURUSD is like the master market for the online trading, so naturally I look at it periodically.

I was (more specifically) looking at the daily charts on MetaTrader. when I spotted something interesting:

To test yourself, can you see a Fibonacci development in the daily charts listed nearby? Just try:

To exemplify the point, I will start with an earlier wave sequence, the one beginning in July.

First wave takes from July 22nd to the November 25th, 2009, when the EURUSD pair goes up from 1.4851 (close) to 1.5136 (close again). In the Fibonacci waves, the first weave triggers the next sequence and creates the opportunity for entering the trades. This Fibonacci wave is also very powerful and short, which is a characteristic of these waves.

However, the opportunity needs to be validated by the second wave, which should decrease from a maximum point, but not below the starting point of the first wave. Wave 2 goes down until Nov 27th 2009 to 1.4967. Wave 2 does not go below the wave 1 starting point, which is a validation that this is a Fibonacci wave.

Wave 3 is much more undecided,  going up to 1.5054 on Dec 3rd. The theory says that wave 4 should go down a little bit for several days, letting wave 5 gain force and go upper than the maximum of the wave 1. What happened was that wave 4 declined substantially to 1.4254 (on Dec16th), due to various external forces. From there, it started to pick up on the wave 5 to upper and upper levels (on my chart the l;atest close stays at 1.4378). Now, the Fibonacci purists might say that if the 4th wave goes much down than the wave 1 starting point, this might not be really a part of the Fibonacci wave and you should look again. But I really do think that we have something here and that the EURUSD might go higher again, leaving a nice opportunity for making some profits on the buy side.

Do you think the same? Do you want to argue with my analysis? I would like to hear from you, so please drop by your comments. In the meanwhile, I placed a trade on my platform and I am extremely curious to see how it will fare.

Good luck from doitinvest.


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