Thursday, September 12, 2013

Wednesday recovery and Inverse Head and Shoulders opens market for further gains

Wednesday market behavior was a very interesting one, and to make my point at the beginning, it wasn't bearish at all. We had a slippage down under 5.00 euro which many (of you?) took as a sell signal - but no new low was reached, it picked up few cents away from 4.90. You might have been stopped out on your long position, but going short in my view was too aggressive.

We had a wonderful recovery on Wednesday to finish in high 5.20s, few days ahead of increased auction volume. That was a first long entry signal. This created a very interesting chart pattern - Inverse Head and Shoulders, which usually opens the market for further gains.

Second entry for going long - building up your long position - was when we broke 5.40 and break out above 5.48 could have been the third before the market rocketed on stop loss orders.

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