After the formation of the new resistance level of 1.2465, the Euro showed a sharp and swift correction down yesterday. Also, we must note the new support level 1.2373 – 1.2387, in which the large volume is concentrated, that stopped the price drop. At the moment, the pair is trading between these two strong levels.
Thus, the best option with the Euro will be to wait for the price to come out of this local consolidation. The breakout movement must be confident and supported by the large volume, which will be a more reliable signal for entering the market.
While the pair is trading within the range, it’s better to stay out of the market.
The Pound also dropped down significantly, tested the previous support 1.4057 and then rebounded up. At the moment the price is located in the middle of the local range. The upper limit of the consolidation is the level of 1.4240, from that the price fell down sharply.
Considering the factors above, the best decision is just to wait for the exit of the price from this consolidation. The breakout move must be abrupt and supported by the large volume, in order to insure us against the fake breakout. If the price continues trading inside the range, we should stay out of the market.
The Yen tested the level of resistance, but failed to finally break it and then corrected down. It is necessary to improve this level, now it is 105.78.
Therefore, our previous scenario remains actual: sales are in priority. We can enter the market after the test of this level and a sharp rebound of the price down on the increased volume. A stop loss should be located a little above the resistance. The potential of the deal is more than 100 pips.
The Canadian dollar is located above the support/lower boundary of the consolidation of 1.2818. Hence, the scenario of a breakdown of this mark is still actual. It will be an excellent bearish signal. The breakdown movement must be sure and supported by the large volume, which will be a more reliable signal for entering the market. A stop loss should be located just above the breakdown volume bar. The potential of the deal is more than 120 points.
If the price continues trading in the consolidation, it is better to remain out of the market.
The Australian dollar showed a smooth fall on the small volume and is testing the support/lower boundary of the consolidation 0.7680 now. Considering that the volume during the fall was small, we cannot give an exclusive preference for sales. Therefore, we can identify 2 possible version:
The price tested the local maximum and then drop down sharply. We should point out the new resistance level/maximum of 1355.70, from which the decline began. Nevertheless, the movement was on the small volume, and given the uptrend, we still have to give preference to purchases.
Long positions can be opened after the resumption of a growth and a breakdown of the resistance level on the large volume. A stop loss should be placed below the breakout volume bar. The potential of the deal is more than 120 points.
The sentiment: this indicator affirms our deals with the Yen and gold, so these 2 instruments are in priority today. With the Euro, the Pound and the Canadian dollar, we should give advantage to purchases, whereas with the Australian dollar – sales. Nevertheless, we need to wait for additional signals with all these instruments.