Forex Price Action Setups – Bearish Engulfing Bar for Kiwi – June 21st

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After forming an inverted pin bar on approach to .8000, the Kiwi followed with a large bearish engulfing bar giving a kiss off the round number, then selling off over 140pips for 8hrs straight. This single engulfing bar took out the last three days of gains, reminding us the downside still has far more teeth then the upside.
Being incredibly oversold on the short term after the cliff dive it took today, we expect the pair short term to pullback, possibly into the .7920-40 area before selling off again.  Thus, short term to end the week, we are looking to sell on rallies into these areas as long as the price action looks corrective and weak heading into it.  Our downside targets would be .7854 and .7800 offering some solid R:R plays there, so watch for price action triggers to fade a rally.

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Global Market Commentary:
Global investors and market got punished today with a trio of bad figures from Asia, Europe and the US. First up was China with a horrible HSBC Flash Manufacturing PMI hitting a 7mos low.  This should be of little surprise considering China’s CB actions and lowering rates as they knew their PMI numbers ahead of time.

Then out of Europe came the German PMI which also did not help with falling new orders and German manufacturing hitting a 3mos low.

The US finished off the hat-trick with the Philly Fed printing at -16.6 which is the weakest since Aug. 2011. Virtually every sub-component of the index was negative.  Combine these ingredients with weak housing numbers and Moody’s warning of an upcoming downgrade for banks – and you get the picture.

The Dow lost 250pts or 1.96% while the S&P gave away 30pts.  The USD meanwhile crushed the majors across the board, with many losing 150+pips vs. the greenback.

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