I still remember where I was last summer when the Dollar started to soar: in front of my platform, thinking of 1000 ways to sell it :)

Why thinking about this now? It’s definitely not nostalgia or a belief that “history repeats itself”. History NEVER repeats itself, as 2 circumstances EXACTLY alike simply cannot exist anywhere. The world would stand still if that were possible… BUT: history has a lot of lessons to teach & history does have its amazingly accurate cycles. And when the “history of the pairs” & “the signs of the charts” become more and more easily readable, it’s probably time to pay attention.

First, the D1 chart shows that the daily formation may be already complete (5 waves on the last daily impulse up), with the first (most aggressive) TL already broken. 2 trendlines await a breakout to confirm that we are heading down once again, for a deeper correction (1.57 area) or for a much stronger move down which in the end could turn out to be a D1/W1 impulse. Time will tell… Only a push & close above 1.6650 would invalidate the current retracement perspective on my daily chart.

The H4 chart is showing since yesterday warning signs about the rally being over (we discussed this in the FXInstructor LTR even before US session, while still being long!), signs that now turn into signals. First, the 3 black corrective waves ended yesterday right @ 61% of the first wave down (1.6743 – 1.5982, a wave that looks clearly impulsive), with strong divergence @the highs (H4 & H1). Also my TRIX has turned red after going down most of the time yesterday (suggesting the bulls were already running on batteries when they pushed for a fresh high).This was already a possibility yesterday, when I signalled the bullish opportunity in GU (http://www.forexfactory.com/news.php?do=news&id=183086), however I had to go for the long side while it was still active.

Finally, H1 is sending out its own warning signals: last wave up (1.6354 – 1.6481) has been retraced already entirely, TL was broken & the MAs are in bear mode with a nice opening, suggesting a bear scenario with limit @1.6460. 15 min looks like offering good shorts with good R/R @ any possible pullbacks above 1.64.

Putting it all together, for me the bullish run started yesterday is over and done with. I agree shorts @ this time are still risky, however for position traders this looks like a great opportunity (50-80 pips risk for hundreds of pips possible return!). Just plan your entry, reduce your risk & you may be in for a smooth & sweet ride. For now I am only short once from 1.6405 & planning to take another short if European open gives me another spike up to 1.6410-6420. No more shorts above this  level, if it goes there I will just wait. If it breaks out to the downside will try to maximize profits while boosting shorts here & there.

Oh, and by the way, for those of you who don’t remember what GU did last summer: it dropped more than 2700 pips in less than 2 months, apparently “out of the blue”. And everything started just about now, with all the trends looking more bullish than ever…