The FOMC rocked the boat and the house at the same time! Wow, what a movements!
Yesterday’s article headline was saying „Big Moves Coming Soon in Forex Market“ and the market did not let me down on that one!
MAJOR movements yesterday after the FED released its views on the economy… sending the USD up and up, and up!
From a technical analysis point of view the USD definitely had reached an area of potential support… There was a 786 FIB close by so maybe more fall was still in the cards… but nothing of the sort and a major bounce occurred.
That USD bounce proved to be key for the AUDUSD as well. I was analyzing the AUDUSD in that article of yesterday and was using 2 trend lines to see if we would get:
1) Bigger bounce to 0.9750 – 0.98 area OR
2) Down trend continuation to 0.9230
Well folks we got the downside break… and a massive one. Price is below the 0.92 level as I am writing this article and the downside power and momentum is nothing short of amazing.
I mean, I am and was a big BEAR on the AUD… And I have been so ever since the famous article on April 18 where I predicted that the AUDUSD to be 0.9150-0.9230 mid June. Well I consider 20th of June still Mid June so looks like the wager worked might fine and prediction was on the money. Also in our trading room we have been shorting the AUD against the EUR and GBP as well…
BUT even I wouldn’t have imagined yet again such an impulsive break to the downside as yesterday.
This to me spells even more bearish potential than I had imagined in the article of April 18…. with the AUDUSD already at 0.9150, the currency seems destined now for a few more falls and the 0.88-0.90 levels definitely not unimaginable… who knows maye even lower 0.80’s …. let us see.
EURAUD AND GBPAUD
Oh and by the way, those weekly candles I mentioned yesterday on the EURAUD and GBPAUD…. Those don’t seem to have much of an influence as both currencies have broken those highs yesterday. Looks like more upside to come… So I am waiting for 1 hour corrections and I will take these currency pairs higher.
At one point or another the EURAUD and GBPAUD are going to make a bigger correction and then you can use yesterday’s article as a good guideline. As mentioned yesterday, even after this potential correction, upside continuation could happen.
The uptrend of late on the GBPUSD has not managed to continue further above the 618 Fib of the huge weekly down move earlier this year. Although we saw several attempts earlier this week to break the 618 Fib, the GBPUSD stopped exactly at that level.
A break fot he 618 Fib could have seen the Cable push towards the higher 786 Fib level as mentioned in Monday’s weekly overview and in an earlier publication. But the Fib proved to be too strong, as one might expect.
In the meantime last week’s weekly low has been broken and so has the last 4 hour support level, which now pushed the GBPUSD without doubt in a down trend on the 4 hour chart.
The momentum pushing price down is strong so I have definitely turned bearish and am looking for pullbacks up for break outs back down again. Although I am bearish, I will still place a Fib on the daily up move. Why?
1) Not because I want to trade that Fib
2) BUT it could be potential support and a potential bounce
3) AND it could be a potential reversal for one more upside to the 786 Fib at 1.60
4) So for the up Fibs are targets for the downside trend
You might be thinking why one more upside? Well basically I think that there are 3 potential scenarios:
1) Massive down trend continuation is back in play on the GBPUSD
2) Downside is a correction of upside for one more push up the 786F Fib
3) We build a wedge in between the +/- 1.52 and 1.58 price levels
To me, I don’t care which one will happen… I will follow price wherever it wants to go. But to me option 3 could be a serious candidate. We have summer time (for people on the northern hemisphere) starting tomorrow, which could lead to a drop in trending modes…
At the moment a pullback and break looks for to short. And considering yesterday’s momentum to the downside, at least one downside break is going to happen…. whether this downside is the massive downtrend or just pullback on the daily for more up remains to be seen. And it is something I will judge by incorporating future price action.
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Latest posts by Chris Svorcik (see all)
- FOMC Gives Green Light for US Dollar Uptrend and Creates Big Daily Breakout Candles - September 18, 2014
- Applying Technical Analysis on the Aussie Weakness to Identify Best Trading Opportunities - September 17, 2014
- News Events Clutter FX Week but Aussie Weakness Tradable - September 16, 2014
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