Forex Trade Signals and Setups Feb. 6th
EURUSD – The Consolidation Continues
As we wrote about last week, the range high for this consolidation has held and the Euro failed to make a higher high. Since then, we’ve really had a choppy range, but a playable one whereby buyers and sellers seem apt to play a back and forth rally between 1.3045 and just north of 1.3200 like an old Connors v. McEnroe match of the 1980’s which you can see via the chart below.
As we look at the intraday time frame, we can note a couple of key things in the price action:
1) Price took 3 stabs at the range lows before holding the line. This is pretty traditional – usually whoever is in control of the directional price action will take 2 or 3 attempts to break a level. If they fail, then you usually see a consolidation or reversal. The first bounce off the lows was rather timid, suggesting the sellers were still in control. But the second bounce and the buyers got a little more impulsive. Although the third bounce made a slightly lower low, from there the market broke the stalemate and climbed to make intraday highs in impulsive fashion saying they were in complete control from the NY open on. Price has closed towards the high so its unlikely much profit was taken.
2) However, the second point to note is price has closed in the middle of the larger range, so this is not exactly the best time to be getting excited about being in any one corner. We suggest patience until the wide ends of the range come in sight before you make your play.
If the price action continues to stay impulsive into the highs, we could see a break tomorrow of the upper end of the range. A touch of the range high will need to be a minimum for the balance to still be in play. However aggressive selling from here would suggest the bears are attempting to make a break south so watch the intraday price action for clues.
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