Up and down, up and down. The currency couples seem to be pretty confused the week before Valentine’s Day and have been bouncing up and down within the same range for a few days. From Mr. Euro, to Mr. Aussie and Ms. USA, most of our forex characters are in consolidation mode. Could this be the calm before the storm?
Mr. Euro was the most indecisive of all as he danced between the 1.15 and 1.13 range for 4 consecutive days against Ms. USA until he kinda tested below 1.13 on Monday night. While this was a perfect opportunity for short-term range traders, my fellow long term traders were pissed off with lack of trading opportunity. We could blame it all on Greece and the eurozone, but technically speaking, this consolidation could actually be the start of a new rock and roll on the forex dance floor. We are all waiting for a reversal signal to finally say goodbye to the bearish slide and start a new journey to the upside. While the pair remains below the Ichimoku cloud, the Tenkan line seems to be heading towards the Kijun line and we all know that a break above it could be our first reversal signal. Meanwhile, Mr. Fibonacci is impatiently waiting for the pair to reach one of it’s retracement levels with the Speculative Sentiment Index suggesting we could see a bullish movement coming up with targets at 1.22 and 1.2533 in extension.
The alternative scenario is if the pair break below the most recent support which could open doors for a free fall towards an 11 year bottom with 1.0775 as first alternative target. But even if that happens, according to our bell-shape market movement theory, we should expect the pair to corrects its downfall at some point right?
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