Good morning traders.
I mentioned yesterday that I hoped we would get some action to stir up the dust and the market did not disappoint.
Draghi was dovish in his press conference but not quite dovish enough to push the eurusd down below the 1.13 handle for a daily close. He had a good try and after and initial bounce back up from the lows which gave the impression that the pair was heading for a close above the 1.1360 level again, sellers weighed in and pushed it back down.
I suspect this price action caught a lot of people off guard and is why I suggested staying out of the market yesterday if you were not able to be at your charts.
One of the reasons in my opinion that gave rise to the about turn lower after the initial push back up was that US preliminary PMI´s came in stronger than expected so we are not seeing a weaker US picture at the moment. This all adds to the chance of a widening in monetary policy divergence between the eurozone and the US which we have talked about already this week.
On top of this later last night we had some suggestion that the US Govt. shutdown may be coming to a resolution. However, both sides are still pretty much entrenched on this so we shall have to wait and see on this one.
Next weeks FOMC will be very informative in terms of the next moves.
But that´s next week so lets look at the charts and levels for today.
The Daily Chart
The strong down candle to test the 1.13 handle remained just north of the level at the close but the picture does give the impression that lower prices are in the headlights. If we do get further falls in the eurusd I suspect that the wick lows at 1.1270 ish will be tested first and the pair will wait until next weeks FOMC to decide whether the lows at around 1.1215 will be tested.
The 4 Hourly chart
Levels as per.
I have marked up the 4 hour chart this morning as it gives a clearer impression of the levels than the 1 hour. As its Friday I wouldn’t expect we will get a close below 1.13 but it could quite easily test lower during the course of the day. However, that´s just an opinion and there are plenty of other opinions out there that could take us anywhere. Price action is all that matter and we need to be ready for all eventualities!
Have a good day amigos and don´t let any ill discipline or lack of patience spoil your weekend. Trade the levels, maintain your risk and stick to the job at hand.
See you Monday :).
