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EUR/USD: Downside Pressure Likely To Continue Short-Term

BySecond Skies
AuthorChris Capre
Published 09/05/2012, 03:07 AM
Updated 05/14/2017, 06:45 AM
EUR/USD
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AUD/USD
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EUR/USD

After the false break from last week, the EUR/USD has now over the last two days formed an inside bar, with yesterday forming a companion pin bar. What is interesting about this is how the last two bars are inside the large bar from Friday, but also mostly contained in the rejection area of Friday’s price action.

This is really tricky as now it has yesterday's close below the major highs from last week, suggesting downside pressure will likely continue short-term. But from a daily chart, there may be some bulls who take this opportunity to form a higher low and squeeze the bears out.

Although I favor the former scenario, the latter is possible but we’ll likely see more consolidation till the ECB meeting this Thursday. Short-term, bears can sell just near the days' highs with stops just above 1.2650 targeting 1.2565 for good RR. Bulls will meanwhile want to wait for a breakout above the 1.2650 are before adding longs, or wait for a corrective pullback towards 1.2500 before stepping in.
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Global Market Commentary:
While markets sold off in Europe over concerns about a potential ECB bond buying program, US manufacturing data fell to its largest loss in more than 3 years, suggesting a weak US recovery as the ISM fell below the 50 level suggesting contraction.

Euro longs were pared as traders await the ECB rate decision this Thursday to see if more monetary easing is in the pipeline.

Volumes were thin, but gold climbed mildly to $1696 on the day while the big loser on the day was the AUD/USD which sold off about 60 pips to 1.0221 making new lows for the last 30 days.

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