The intraday move on euro yesterday was a good lesson in waiting for confirmation. The initial spike higher looked to be finally breaking the shackles of the recent consolidation with a move above the high at $1.1453. However, this move proved to be short lived and incredibly a 120 pip sell-off subsequently looked to threaten the bottom of the consolidation at $1.1325 before settling down gain. And so we are left with yet another small bodied, long shadowed candle. I also do not believe that the fact that the price could not breach the resistance at $1.1465 is a coincidence, being the significant long term overhead barrier. I am still of the opinion that there will be a near term unwinding correction, with the RSI and Stochastics beginning to show signs of deterioration. As yesterday teaches us though it is best to wait for confirmation of a breakdown of the range first, so a close below $1.1325 would be the signal. This would complete a near term top and imply a move back towards $1.1200 area. The initial weakness of the euro today hints that a breakdown is possible, but we need confirmation.
Chart – EUR/USD
