Yesterday I had an interesting day.

My report was cautious on the Euro and Swissie but I saw a bullish Pound and also Aussie Dollar, Dollar-Canada topping out just above 1.25 and a neutral to bearish Dollar-Yen. Overall a good day’s work.

As you know I published the Euro analysis as the daily free analysis:
Bias: I feel some care needs to be take today with momentum signals and structure conflicting
Losses pushed directly lower to the 1.2705 low. The pullback has been steady but I suspect that at the very least we’ll see one more attempt higher and we’ll need to observe reaction at key resistance. I feel the 1.2800 support may well hold today but allow for 1.2768-78. A subsequent break above 1.2875-97 would provide the next lift to resistance at 1.2942 and probably 1.2963 & the key resistance at 1.3017-30. This must cap for a larger bearish move. Breach would accelerate gains to 1.3090-1.3120 and later to 1.3178.
While neutral I’d added the bullish comments to be seen while the bearish were in the attached PDF file.

Early in the European day I was advised that there had been some comments. Great I though, I like to have traders reading my report.

“No way, this thing is going lower today. German retail sales came in worse, US Pending Home Sales will be better than expected. More room to go south that is…”

It’s good to have an opinion. At that stage the Euro had remained above 1.2801 but was in a neutral consolidation. So effectively it was still in a neutral condition.

7 hours later the Euro had spiked up to… guess where … 1.3030 and stalled. This brought an indignant comment:

“What’s happening? My prediction about housing data was right, be it is going north! Why???”

I tell this tale partly because I was on the mark but also just to highlight how blunt an instrument economic analysis can be. It also highlights how little is known about price forecasting. It also explains the reason I gave up economic analysis many, many years ago… It just doesn’t work.

After I had become a technical analyst I was hauled back from Hong Kong to the head office trading room in London for Barclays Bank. I’m sure someone did it as a joke but I was sat next to the economist. During one of our conversations he finally explained the “facts” to me…

“Ian,” he said, “you’ll never win. If I make a bad call then it’s for the right reason, if you do then it’s always for a bad reason…” I saw red at that… but I can at least look back and laugh. Actually the economist was a really nice guy so no hard feelings!

Traders come into the market and study all the technical indicators and fundamentals releases and how they should theoretically react to these releases. However, very little, if any, study is made of price.

There is nothing else that can produce accurate support & resistance levels.

I rarely ever know what economic releases are being made each day. It just doesn’t impact on my analysis. Everything is price driven. However, it isn’t something that can be picked up by reading a book, by using it for a week or two. It does take a great deal of study over years to become comfortable with recognizing the weird and wonderful structures that Elliott Waves can make, the types of projections in each currency pair.

However, it doesn’t make too much difference. As long as you have gathered trade set ups with which you feel comfortable then the sort of daily report I provide will give you consistent support & resistance levels around which you can confirm the expected trade – whether that be a bounce from support or breach and selling into weakness.

What is lacking in the majority of the market is confidence in support and resistance since they are not easy to produce.

I had, incidentally, also advised that a break of 1.1545 USDCHF would lead to a decline to 1.1405 as well. Not a bad trade…

The key is knowing which levels are important. These are the ones I produce with moderately high consistency. Try the report out of you would like to see!