The larger time-frame trend can’t be any clearer. Price has been pushing new high after new high and making significant progress on the bigger picture. The recent swing high 1.3439 put in on 9/20 was exceeded Friday after pulling back into a new swing low support of 1.3282 in the middle of the week . The pair then closed near its highs for the week, another bullish sign. In this environment, trend and momentum are clearly up. This means NO shorts on the bigger picture as tempting as it may be. The market is giving us the answer, we simply have to wait for price to reach a new support and then we look to establish a long position. At the same time, you don’t want to just buy into this pair at any price, especially on highs because the risk is too great. Waiting for support is what helps you define your risk. The key support to watch is the 1.3282 swing low. If price breaks below and sustains the move, it means the bullish momentum is changing to bearish, but this does not mean the trend is turning bearish just yet. If price takes out 1.3282, I would look for evidence of a range bound market and look to identify the next support which should be around the 1.3050 area. Remember in a bullish trend, supports should hold and resistances should break. If price can continue this trend, the next area of significant resistance is in the 1.3680 area which comes from the consolidation going back to March/April of this year This resistance area is where we can anticipate a change in price action. If you happen to be in long positions as price approaches this area, you should consider taking profits on signs of price hesitation.
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