EURUSD – Strong Rebound Suggests False Breakout

By Unknown

Rabu, 13 Juli 2016

EURUSD – Strong Rebound Suggests False Breakout

Last week I stressed from 1.1375 to 1.1525 as a level of mass resistance of the euro against the dollar, indicating that a break above here would be very optimistic.

This was before the markets have experienced tremendous volatility levels Monday that strongly worked in favor euros, apparently due to the unwinding of carry trades. Whatever the reason, the euro rallied through this area of ​​resistance with relative ease.

But it doesn, AOT means that this level is essential, it does not mean the pair is particularly optimistic, yet. As seen we, AOVE market today, it isn, AOT that we can read in moves at the beginning of the week, except that they are prone to fear-driven panic that creates exceptional levels of volatility and a flight to Security.

From a technical standpoint, however, we should learn how bearish this pair is really in the next 24 hours or more.

Today we Aore see the pair reversed much of the gains made on Monday and it AOS closing now back in the 1.14, around its opening on Monday.

If it closes below Monday, open SOA, it is strongly the view that yesterday AOS movement reflects the panic rather than the significant change of bias that a break would have under normal conditions market.

It would also create a bearish engulfing pattern on the daily chart which is a fairly bearish configuration under normal circumstances. Given the size of yesterday, AOS rally, I think it is even more so.

If, on the other hand, rallies in euro in the end of the session and we see a close above 1.1525, the upper end of the resistance range, it suggests just yesterday provided through triggering and the market is actually upward, even at these levels.

Close between 1.14 and 1.1525 would represent indecision and the price action over the next two days should provide, hopefully more clarity.

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