There was a fake breakdown of the consolidation yesterday, after which the price rebounded up and totally absorbed the bearish momentum. Also we need to note that the move was on medium volume that was spread throughout it, so we can’t point out any new volume level or zone.
That’s why our scenario remains the same: we need to wait for the sure and strong exit of the price from the range and only then we can consider any deal. If the price continues trading in the consolidation, it is better to stay out of the market.
The pound has broken down the previous level of support/lower boundary of the consolidation and continued its fall. The move was abrupt and supported by increased volume which are good bearish signals. Now the pair is trading in the local consolidation near the minimum 1.2853, which contains quite large volume accumulation.
Given all these factors, we should consider short positions after the confident breakdown of the level 1.2853. A stop loss should be placed above the higher boundary of the local consolidation. A potential of the deal is around 130-140 pips.
USD/JPY continued its growth and now is trading near the level of resistance 110.92. If the price breaks out this level on increased volume we can consider opening long positions with a stop loss placed below the breakout volume bar. A potential of the deal is around 100 pips.
USD/CAD has broken out the previous local maximum and continued growing. Also we need to point out the new resistance 1.2775 that contains increased volume and stopped the upward move. Given a strong local uptrend, we should consider long positions after a sure breakout of this level. A stop loss should be placed below the breakout bar. A potential of the deal is more than 90-100 pips.
The local downtrend for AUD/USD continued as the price fell down and breakdown the previous minimum. The move was pretty rapid, but it was stopped by the new support 0.7816 that contains increased volume. The price did not show a strong reaction on this level, so we should consider short positions after its breakdown. A stop loss should be placed above the breakdown bar. A potential of the deal is around 60-70 pips.
It is worth noting the fresh support level 1267.70 – 1269.90, which was formed yesterday and in which large volume is concentrated. It is also important to note that after the formation of this mark, the pair showed a rather rapid rebound and absorbed the previous bearish impulse. Thus, this level is the cornerstone for trading gold.
It is worth highlighting 2 scenarios of work from this level:
1. If the price tests this level (or corrects to it) and resumes growth on large volume, we can open long positions. A stop loss should be placed below the support level. The target is 1291.10.
2. If the price breaks this support on large volume, we can consider the option of opening short positions. A stop loss should be placed just above the breakdown volume bar. The potential of the deal is about 140 points.
The sentiment: the mood of the market confirms our scenarios for the pound, the yen and gold. For 3 other currency pairs the situation is unclear.
The bottom line: GBP/USD, USD/JPY and XAU/USD are in priority today. Be careful before the FOMC Meeting Minutes.