Why is EURUSD correcting lower after such an impulsive breakout?
Firstly, we have nothing in the way of major economic releases or ‘news bombs’ to send the major currency pair in either direction.
After an aggressive turnaround in stocks, we have seen the market relatively flat this week as we consolidate waiting for the next move (or Trump tweet).
So, what do we expect to happen in EURUSD over the short and medium term? Let’s first look at the USD index.
NEVER look at one timeframe.
USD Index Daily – We broke the formation to the downside. The measured move target for this pattern is seen at 95.74. So why the stalling in price action (with Inside Days posted).
USD Index Weekly – If we look to the weekly chart we have stalled at the trend of higher lows (appox. 96.59). This formation also has a downward bias but with ample scope for a correction higher before the breakout.
Let’s have another look at the from a different angle. We have our bespoke at 97.45. A correction to this level could from the right shoulder of a pattern. We look to sell into USD rallies
How does this reflect back onto EURUSD?
EURUSD Daly – Aggressive and impulsive breakout of the formation. The measured move target is 1.1448. With bespoke resistance at 1.1430, we still look for upward pressure and to target this zone over the medium term.
Let’s look at it from a different angle. Inside Soldiers posted highlighting indecision. The move lower possibly forming the right shoulder of a reverse pattern. support is seen at 1.1218. This is between the 50 and 61.8% pullback levels. Bespoke support is seen at 1.1210. We look to buy on dips to complete the right shoulder
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