The Euro showed a pretty strong downward correction and broke down the level of support. Now the price is trading in the consolidation again. Also it is necessary to point out that the fall of the price was on small volume, so we can’t point out any new volume levels or zones, so that we can’t consider it as a reversal signal.
Given the strong uptrend, we still should give preference to long positions.
We can enter the market only after the strong bullish signal – abrupt growth on large volume. A stop loss should be placed below the level 1.1620 – it was the beginning of the previous sharp growth. A potential of the deal is more than 100 points.
Oppositely to the Euro, the pound fell down on pretty large volume and almost absorbed previous sharp growth. Besides it, volume was spread throughout the chart, so we can’t point out any fresh levels or zones. So that it is difficult to predict further move of this currency pair.
That’s why the best decision will be just to skip this instrument from our trading plan and wait a creation of new strong volume or zone that can be used for trading.
USD/JPY tested the level of resistance 111.45 – 111.55 and rebounded down sharply and on increased volume. This is a good signal for further continuation of the global downtrend, so we should search for a good entry point for opening short positions.
We can enter the market after a small correction up and a beginning of the fall on increased volume. A stop loss should be placed above the previous test 111.72. A potential of the deal is 110-120 pips.
USD/CAD grew up strongly and broke out the level of resistance. The move was sharp and supported by large volume. Moreover the growth has totally absorbed the previous fall, so that we can’t open short positions now. On the other hand, there is a strong downtrend, so we can’t open long positions as well.
So we should stay out of the market now and wait for some new signals.
The Australian dollar has corrected down and is trading in the level of support 0.7967 – 0.7975. The was quite abrupt, but on small volume. Given this fact and the strong uptrend, we still should give preference to long positions.
We can enter the market after the strong rebound of the price from the support on large volume, which will be a great bullish signal. A stop loss should be paced below the level of support with a little margin. A potential of the deal is around 80-90 pips.
After a rapid price growth, gold corrected to the support level 1254.10 – 1255.70, tested it, then rebounded and is trading near this mark. The price correction was rather sharp, but on average volume, so it’s impossible to allocate a new volume level or zone.
It should also be noted that despite this price fall, the local upward trend for gold remains relevant, so it is still worthwhile to give preference to long positions.
Nevertheless, it is only after a strong confirmation signal that the long lines are opened. Such a signal can be a re-test of support and rebound prices up on large volume or the price growth from the current level on large volume too. A stop loss must be placed below the support level of 1254.10 – 1255.80 with a small margin. A potential of the deal is about 120 points.
The sentiment: as can be seen from the chart below, our scenarios for the euro, the yen and Australian dollar are confirmed. The situation for gold is complicated, but there is still a strong uptrend.
The bottom line: there are corrections for all instruments, so we need to wait for their ending and for the resumption of trends. Be extremely careful today.