The euro tested the level of support 1.0863 one more time but failed to break it down and is trading a bit above it now. Volume in the market is still low, so we are unable to highlight any new levels or zones.
So our previous scenario remains the same: after the confident breakdown of the support with further fixation of the price below it we can open short positions. A stop loss should be set above the breakout bar. This move should be on increased volume; it will insure us from the fake breakout. The target is 1.0732.
It is necessary to highlight the new level of resistance 1.2981 – 1.2985, which contains fairly large volume, that stopped the price growth. Also this level is the local maximum and the upper limit of the consolidation, which only strengthens its value.
Also we need to note an interesting point: the volume growth before the European session was almost immediately absorbed, and the price could not continue its upward movement. This is a signal of weakness of bulls.
Thus, we can consider the option of opening short positions after the resumption of a price fall on increased volume. This will be an excellent bearish signal for the continuation of the downward move. It is desirable that before that, GBP/USD slightly and smoothly corrected upwards. A stop loss should be placed above the resistance level 1.2981 – 1.2985. The first target is 1.2875. If the price reaches this mark, it is better to transfer a stop loss to the break even and hold the position, approximately, to the level of 1.2773.
A strong uptrend for the yen continues, so our previous scenario remains the same – we should open only long positions. Unfortunately, there is no a good point for enter now, because we don’t have a safe place for our stop loss. The nearest support level is too far away.
In such a situation we need to wait for the creation of the new volumetric support level or a strong bullish momentum to be able to trade USD/JPY. However, the possibility of the correction is pretty high as the price grows on quite low small volume.
So it’s better to stay out of the market until an appearance of a good entry point for purchases.
A strong growth of the oil price caused a strengthening of the Canadian dollar, so that USD/CAD fell down sharply on large volume. But then the price totally absorbed this move and is still trading in its local consolidation.
The level of resistance 1.3785 remains the cornerstone for trading USD/CAD. The breakout of this level will be an excellent signal for opening long positions. A stop loss should be set below the breakout volumetric bar. A potential of the deal is around 100 pips.
If the price resumes its fall, it’s better to be out of the market and don’t trade against the trend.
It is important to point out the new volumetric resistance level 0.7384 – 0.7393 for AUD/USD. It contains large volume and stopped the upward correction of the price so that short positions remains the priority scenario for the Australian dollar.
We can enter the market after a small and smooth correction of the price up to get a better entry point. A potential of the deal is around 80 pips.
Gold continues falling and is trading below its level of resistance 1226.00 – 1229.10. The move down was on increased volume so it confirms our scenario of opening short positions.
We can enter the market after a smooth correction of the price, approximately, to the level 1222.30 to obtain an acceptable size of a stop loss and a better risk/profit ration. A stop loss should be placed above the level 1229.10. A potential of the deal is around 110-120 pips.
The sentiment: deals for AUD, CAD and gold are confirmed. For the euro a situation is 50/50, but all technical factors are for short positions. The sentiment for the pound shows that long positions should be in priority, but as I wrote before, a situation seems to become more bearish.
The bottom line: the euro and gold are still priority deals. AUD/USD and GBP/USD also very interesting instruments for trading.