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The long-term outlook for the cross remains to the downside but we look for a higher correction intraday. This has resulted in another two-way play this week
Monthly – Over the long term, we are looking for a move back to the reverse trend line support at 0.7975. For the last 5 months, we have seen spikes in both directions highlighting indecision.
Weekly – Highlights a possible descending triangle formation. Plenty of scope for a move in either direction. A break of last week’s low is needed for the selloff to continue.
Daily – I think most FX analysts are toting the same formation. A possible bearish Head and Shoulders. The reason I say ‘possible’ is that the base needs to break to confirm the formation.
Intraday (four-hours) – The last move lower can be seen in five waves reversing close to the 261.8% extension level of 0.8302 (from 0.8788-0.8603). This would ‘suggest’ that the last move (higher) is merely corrective. We have left a gap open at 0.8370. These windows tend to get closed. The previous area of congestion is seen at 0.8570-0.8600
Intraday (60 minutes) – We have broken the triangle formation to the upside. The measured move target is 0.8565. 261.% extension is seen at 0.8576 (from 0.8312-0.8414)Source: Saxo Bank
Management and risk description
Entry: buying at 0.8520.
Time horizon: today only
Time horizon: medium term