We saw a reversal of Market Sentiment to exuberant irrational enthusiam. Eur/usd and the other major pairs made a huge move against the USD.
Option barriers and stop losses were taken out. Momentum traders jumped on it.
This week we have an FOMC meeting, an ECB meeting with a possible euro interest rate cut, and the Friday's Non Farm Payroll numbers. Each of these will trigger a kneejerk reaction that will test support/resistance levels.
Knowing this, and the fact that the global ecomomic situation is not all doom and gloom for now, has triggered a yearly seasonal pattern of a bull run in equities until Thanksgiving or New Years. This pattern has been fairly consistent over the years, and the Sept gloom and doom scenario drove the market prices down to value levels where they were bought hard. Bears had to bail or short cover. The market swung wildly lately clearing out orders along the way and clearing the path for a big move up. At this point, the bears and the bulls are both buyers until momentum wains. Then we see a sideways movement and a retracement back to test previously broken support.
The daily chart for eur/usd shows a very small bearish colored candle. This denotes the very tight range that this pair traded on the last day of the week. Long positions have mostly held, as the small candle denotes little profit taking occurred. Short covers are still holding. If they dump their positions or take partial profits, the pair will retrace.
You can see the momentum indicators have reversed. We have divergence, when the pair encountered option defensive barriers, residing just under 1.4200.
The Bulls may need to reload in order to break out. Market Sentiment will dictate what this pair will do. Offers to sell will need to absorbed.
Risk on = Buy Dips
Risk off = Sell Rallies
Option barriers and stop losses were taken out. Momentum traders jumped on it.
This week we have an FOMC meeting, an ECB meeting with a possible euro interest rate cut, and the Friday's Non Farm Payroll numbers. Each of these will trigger a kneejerk reaction that will test support/resistance levels.
Knowing this, and the fact that the global ecomomic situation is not all doom and gloom for now, has triggered a yearly seasonal pattern of a bull run in equities until Thanksgiving or New Years. This pattern has been fairly consistent over the years, and the Sept gloom and doom scenario drove the market prices down to value levels where they were bought hard. Bears had to bail or short cover. The market swung wildly lately clearing out orders along the way and clearing the path for a big move up. At this point, the bears and the bulls are both buyers until momentum wains. Then we see a sideways movement and a retracement back to test previously broken support.
The daily chart for eur/usd shows a very small bearish colored candle. This denotes the very tight range that this pair traded on the last day of the week. Long positions have mostly held, as the small candle denotes little profit taking occurred. Short covers are still holding. If they dump their positions or take partial profits, the pair will retrace.
You can see the momentum indicators have reversed. We have divergence, when the pair encountered option defensive barriers, residing just under 1.4200.
The Bulls may need to reload in order to break out. Market Sentiment will dictate what this pair will do. Offers to sell will need to absorbed.
Risk on = Buy Dips
Risk off = Sell Rallies