G’day Surfers – You don’t always get paid for being right.
I was Bearish but NOT expecting a 150 pip crash – and that’s what happened yesterday to EUR/USD. Sometimes getting the direction of the market right is not enough to bank pips. In fact, if you get a little “creative” (read cheeky), you can find yourself on the wrong side of the ledger. I attempted to pre-empt Price Action’s passage to Daily Pivot and got it wrong. The key to surviving such extravagances, is to trade them with very small stakes and that’s what we did.
Huge change in market sentiment after yesterday’s crash and indeed I am starting to see some weakness in the cross. A substantial (3 month) Support Trendline #1 has now been broken and Price has recently breached our long term Resistance Trendline #2 which I would expect, will provide some support (again). It’s at this level, I believe EUR/USD will consolidate today. As always, I am aware of an untested Daily Pivot some 80 pips above Price Action (as I write this) and that will prevent me looking for Short entries.
The Day Ahead
So with Short entries off the table until some decent pullback eases the oversold nature of the market, what of Longs? I won’t rule them out but any entry will, like yesterday, be very small stake because we’ll be trading against a fairly strong short term Bearish Trend. Entry will depend on Price Action creating a Resistance Trendline #3 or playing a false break of the next Support Trendline #4.
High Impact News – CET
|9:00am||EUR||French Flash Manufacturing PMI|
|9:30am||EUR||German Flash Manufacturing PMI|
|Tentative||EUR||Spanish 10-y Bond Auction|
|2:30pm||USD||Core CPI m/m||0.2%||0.1%|
|4:00pm||USD||Existing Home Sales|
|USD||Philly Fed Manufacturing Index|
Enjoy your Thursday.