So we have observed the weekly flag line being broken at the start of the year which resulted in a sizable $60 rally. Many people at this point are expecting $2000 - $2250 because of the formation pattern and we saw the price testing the flag as a support on the 6th before attempting to go further up in which it failed and eventually crash back into the flag today, triggering a bearish momentum towards the downside today. TP was set at the bottom of the wolfe channel from last year at 1850. Exceeding expectations, it broke the channel and then carried on the momentum down towards 1827 before reversing.
So what can we expect now for the short term? A bullish crab formation has formed on the hourly chart. 23.6 is pointing towards the bottom of the wolfe channel, breaking it will generate enough bullish momentum to gun for 1865 almost guaranteed. and if the dotted line highlighted in the chart was to break, we can then look for 1877. For anyone who are holding longs from 1827 - 1840, those are ideal targets to look for. However, the fact that we have broken back into the weekly flag means that overall sentiment remains bearish. Bulls will need to be careful since any upward movement now is just healthy retracement until the flag gets broken again.
Key levels to take note of now for bulls: 1850 -> 1865 -> 1877 -> 1889. Set your SL to break even for minimal risk. Bears can look to set sell limits at those levels aiming for long term EW target at 1680 which I still firmly believe that it's possible until the stimulus package arrives which will cause DXY to plummet. SL will be above of the weekly flag since breaking the weekly flag again will trigger another bullish momentum towards the upside.
So what can we expect now for the short term? A bullish crab formation has formed on the hourly chart. 23.6 is pointing towards the bottom of the wolfe channel, breaking it will generate enough bullish momentum to gun for 1865 almost guaranteed. and if the dotted line highlighted in the chart was to break, we can then look for 1877. For anyone who are holding longs from 1827 - 1840, those are ideal targets to look for. However, the fact that we have broken back into the weekly flag means that overall sentiment remains bearish. Bulls will need to be careful since any upward movement now is just healthy retracement until the flag gets broken again.
Key levels to take note of now for bulls: 1850 -> 1865 -> 1877 -> 1889. Set your SL to break even for minimal risk. Bears can look to set sell limits at those levels aiming for long term EW target at 1680 which I still firmly believe that it's possible until the stimulus package arrives which will cause DXY to plummet. SL will be above of the weekly flag since breaking the weekly flag again will trigger another bullish momentum towards the upside.
TLDR: short term buy now for wave 4, and prepare to sell for wave 5 in the mid term.