The market is boring. Elections in Germany, earlier FOMC but investors seem to be waiting for something more. Is there a bigger correction coming that I’ve heard about for a few years? ? We will see, but for now we are looking for opportunities to enter a good signal.
Let’s move on to the graphs:
I wrote about a couple days ago. After breaking the resistance, it seemed that further increases were a matter of time. However, the polarity change did not work and the previous resistance did not turn into support. Now it is time to wait and watch further developments on the Australian Dollar to Yen.
Price has reached a very important level of support, which at the same time is a neck line of the formation of Head & Shoulders (I wrote more about it in the article: Price Action Reviews AUDJPY, EURUSD, GBPAUD, USDCAD). If the price goes down, you can expect a further 150 pips drop, and it is worth looking there longs in line with the long-term trend of the Eurodollar.
However, if the price will rebound now and a clear buy signal on the daily or 4-hour chart occurs it can be a very good opportunity to open long positions. At the same time this would be the negation of the H&S which usually results in a dynamic movement that is contrary to what the formation indicates.
Canadian dollar, after the announcement of the Bank of Canada to rise interest rates, has significantly appreciated. Now there is a slow correction of these moves, which has led the pair’s price to resistance. InsideBar occurred (marked in green). The big “mother” candle contains 3 more candles. Three scenarios are possible:
- The best because of the direction of the Central Bank and probably with low Stop Loss – break up, fast return and the ability to open shorts – the so-called Fakey (Price Bar Action, Pin Bar, Fakey, Inside Bar)
- Break down and close the daily candle below the mother candle. Then you can open shorts, while Stop Loss will probably be slightly larger than in the first case.
- Play long after the candle has closed above the resistance and range of the mother candle. It will be against the policy of the Central Bank, but such is also possible if the market does not want to go where the Bank wishes.