Hello Forex Traders,
Today the ADP Non-Farm Employment Change figures will be released and also the FOMC statement at 2pm EST. Should we have expectations? Probably not.
The FED is not expected to taper its Quantitative Easing (QE) this meeting – and maybe even this year. With that said, obviously the market always tends to slow down a lot before the statement release – like quietness before the storm. And I am sure there will be some volatility during and after the statement, but I would expect that volatility to be less than usual.
This week we already covered the majors quite intensively. For more information on that check out these links here below:
EURAUD WEEKLY END OF TREND?
The EURAUD has corrected the multi-year downtrend up to the 38.2% Fibonacci retracement and is now stalling. The currency has not been able to post new highs for a while and a range or bigger retracement is now in motion.
1) The support uptrend line has been broken
2) The top has not been broken for multiple weeks
3) The oscillator has turned red and has been trending down for many bars / weeks (8)
4) The oscillator has “time” to reach the zero line. When it does reach the 0 line, then the minimum retracement has been met and break of the top could still occur.
All these points indicate that that impulse to the upside is over and that the currency is now either in a range or retracing.
On the daily chart, however, we see that price is moving back up again. Is this a continuation of the weekly uptrend? It could be, but the chances are slim.
1) The chances of a Gartley pattern playing out in this scenario are higher.
2) The currency could show weakness by posting a lower high on the daily chart.
3) That lower high will most likely happen at the downside Fibonacci retracement levels- which have a high likelihood of acting as resistance.
I would be expecting the downside move to finish either at:
a) The -0.272 and 38.2% Fibonacci retracement confluence
b) The -0.618 and 50% Fibonacci retracement confluence
Both these levels could be the bouncing spot for one more upside to break the weekly top but this is too soon to tell. It will depend on how price responds to the above mentioned targets whether we will see that trend reversal back up – or not.
In the meantime I would not be surprised to see a downside correction and an inverse head and shoulders appear as well. A bounce off of the bottom at the 78.6% Fib for instance, a retrace of the oscillator to the zero line and a break of the red resistance would confirm that potential. I would need to see a break above the resistance (red) or a deeper pullback before going long makes sense though.
Thanks for sharing this article and wish you Good Trading in the last 2 days of the October month!
Latest posts by Chris Svorcik (see all)
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