Yesterday, the Euro showed a significant and sharp drop and broke down the previous level of support. This is a great bearish signal. The downward movement was on the small volume, so at the moment, we should not open short positions.
We can enter the market and open sales after the resumption of a sharp fall, but the movement should be supported by the large volume, which will be a more accurate and reliable signal. A stop loss should be placed just above the beginning of this movement. The potential of the deal is about 120 points.
The Pound also demonstated an abrupt sink yesterday, but the pair is still located within the local consolidation between the support level 1.3030 and the resistance level 1.3251.
Hence, we can consider new positions only after a sure and keen breakout of one of these levels and the exit of the price from the range. The breakout movement must be supported by the large volume that will insure us against a false breakout.
The Yen grew up strongly yesterday, but is still locked inside the local consolidation between 2 strong levels. They are the support 111.74 and the resistance 112.76 – 112.89. Therefore, our previous scenario remains actual: we can regard new trading scenarios only after a confident and rapid exit of the pair from the range. The breakout move must be on the large volume, which will be a more accurate and strong signal to enter the market.
The Canadian dollar also showed an abrupt rise on the large volume and is currently located near the level of resistance/upper boundary of the local range 1.3068. This gives us the opportunity to regard a scenario of its breakout, which will be an excellent bullish signal. The breakout movement should be rapid and on the large volume. A stop loss should be placed under the breakout volume bar. The potential of the deal is more than 120 points.
The Australian dollar carries on trading inside the local consolidation between the support level 0.7058 and the resistance level 0.7200. Hence, we can enter the market only after a sure exit of the price from the range. The breakout movement should be abrupt and on the large volume, which will insure us against a false breakout and will be a more reliable signal for opening new deals.
Nothing has changed with gold as the price is located in the small range just below the resistance level 1231.50. Hence, our previous scenario remains actual: we can open purchases only after a confident breakout of this mark.
The breakout movement should be rapid and supported by the large volume, which will be a more accurate signal to enter the market. A stop loss should be placed under the brekaout volume bar. The potential of the deal is more than 150 points.
If the price continues correcting downwards, it is better to stay out of the market.
The sentiment: the mood of the market affirms our scenarios with EUR/USD and XAU/USD. The situation with gold is 50/50, so we should wait for the appearance of an additional signal. With all other currency pairs, we are waiting for prices to go out of ranges and only after that we can consider new deals.