Looking at short Brent Crude, EUR-crosses

I think that Brent, WTI setups this week have reinforced the bearish direction. I will cover Brent shortly. In addition, EUR-crosses also look good – I will cover an overview as well as 3 currency pairs.

 

Brent Crude bearish trend

I wrote about Brent last week and I wrote that it is going down, that any strength is retracement only. The strongest evidence is November’s ‘bearish expansion‘ which terminates the previous month-month uptrend. The good news is this week’s Shooting Star candlestick or simply pinbar has exposed the confluence of resistance on top which is good for stop-loss setting but the bad news is same Shooting Star has almost reversed the entire week’s gain in one day which means that retail traders looking for tight stops have to try fishing for a tighter entry.

Brent Crude weekly chart, August 2015 - present

Brent Crude weekly chart, August 2015 – present

Patience is a virtue. I think that this kind of setup requires one to do a kind of ‘bird droppings’ style of entry. There is no perfect trigger. Rather that wait for a perfect trigger, better to identify a resistance zone and then drop limit entries here and there.

 

Overview of EUR weakness; best pairs to short EUR

It would be unfair to say that Trump’s election for President of the United States caused EUR’s weakness. In my opinion, EUR’s weakening starting back in September but it is logical to me to start the chart below from 09 November to look at the EUR’s current phase of decline.

Major EUR crosses overlaid in this 8-hour chart setting from 09 Nov 2016 to present

Major EUR crosses overlaid in this 8-hour chart setting from 09 Nov 2016 to present

This chart shows EUR declining against most commonly traded currencies except for JPY. The Japanese Yen is a lot more weaker for some other reason – therefore EURJPY is the last pair to trade if you want to short EUR.

On the other end of the chart, we can see GBP and USD. For traders who want to bet on EUR weakness, the best to worst pairs of EUR crosses to short are EURUSD, EURGBP, EURCAD, EURAUD, EURSGD, NZD and then EURJPY. Past performance is not equal to current performance – for a EUR short to work, ideally this 09 November to present trend should continue.

 

EURUSD weekend doji under trend line

EURUSD fell steeply and has created a new low year-to-date. I think that this is an important development that suggests EURUSD can fall some more. However I think that it is also important to see how the currency pair closes at the end of the year.

There are some features in this chart to note: the very long trend was broken so I think we can go on to horizontal levels. At this moment, support is at November ’15 low based on last week’s doji. The fact that doji closed below the trend line than on top is good for sellers. However don’t be naive because price can easily pop back up.The

EURUSD weekly chart July 2014 - present

EURUSD weekly chart July 2014 – present

The next level to go is last year’s low at March 2015. This level originally coincided with DXY at 100 but since DXY looks like 100 was already decisively penetrated and set to go higher, I would expect some but maybe not a lot of support at 1.0459. If EURUSD breaks 1.04, I would take trading 100 pips at a time at round numbers, 1.03, 1.02. Psychological target would be 1.0 parity.

 

EURNZD closes below 4-month consolidation

Look for bearish continuation.

Key features: July support broken, 4-month consolidation broken, overhead trend line a guide.

EURNZD weekly chart April 2015 - present

EURNZD weekly chart April 2015 – present

 

EURCAD penetrates 12-month support line

Look for bearish continuation.

Key features: 12-month trend line looks decisively broken, support now appears to be orange, black, potential resistance from red and blue. See above discussion on EUR relative strength, EURCAD is one of best pairs to trade EUR weakness since 09 November.

EURCAD weekly chart Sep 2015 - present

EURCAD weekly chart Sep 2015 – present

Last week’s observations linked here.

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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005. Soh Tiong Hum is a member and regular speaker at Technical Analysts Society Singapore events and has a bi-monthly lunch time event at IG Singapore on forex and stock markets. He is an avid blogger on technical analysis topics; his Twitter account @sohtionghum was ranked #23 out of The Top 70 Twitter Accounts To Follow In 2015 by MahiFX. Come find Tiong Hum on Google+
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