G’day Surfers – ready for action?

Yesterday’s Report

There are days where the FX Market gives us very clear signals that scream at us “the market is Bearish” or “Sell when Price goes here” etc., yesterday was NOT one of those days. The big gap had a numbing effect on Asia Session and no direction was the result. London produced a positive move without warning as 50 % of the gap closed but then it was a very nervous market that produced mini rallies and crashes = consolidation. We had no interest in guessing which way was next so no trading for us.

Technical Analysis

The market is still in “after shock” in my opinion and directionless in the Short Term. Like all periods of consolidation however, this one will end and we have a Pennant #1 suggesting that may not be far away. Our Pivots are confirming a Medium Term, very clear Bearish Trend and Daily has been tested. EUR/USD managed to stay above what amounts to the last Support – our Daily Critical Zone #2 @ 1.2908. This again will be crucial to the cross’s opening level tomorrow. If it fails, 1.2675 looms large but if it provides sufficient Support – the buyers may just get the gap closed. The situation appears black & white………gap closes or EURO falls into the abyss below. Of course the third option – continuing consolidation, remains.

The Day Ahead

Our challenge then, is to profit from whichever of the two preferred options transpires. The break of the Pennant is the key to our early activity so a setup at either Hotspot will determine actions. My slight bias is Bearish (with the trend) but I’m not averse to tagging along with the gap traders if they make a move.

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