I´ve started Friday´s post with the following hypotesis:
Pointing out the accuracy of some of the areas and references. I´m not sure on how the day is gonna end -specially, during the Eurofin meeting being held- have marked 1.3118 which is a confluence point where POC and zones have an important meaning
This ,is in fact, what actually happened, as marked on the chart below. Price rotated around this area over the latter part week, only to give way for sellers to act into lower value areas. Important to note is that -regardless of the broad and important market sell off on Friday- the €uro managed to contain the losses to 0.34%, as opposed to oil, metals and indexes, which experienced losses of 2-3%. I was expecting further downside towards the previous area of balance 1.2978-1.2927, as noted on the next chart below.
What to look for over the upcoming week? It is strange for the move not to continue towards a more important buying area, which could also be interpreted at this juncture as another important reference point towards higher areas of value. Provided it gets defended by buyers, then I´ll be looking towards 1.3060-1.3080 (note that 1.3063 & 1.3018 are key pricepoints, both marked by pink dotted lines, in which the move and rotations around price have actually been contained over the last few days)
As noted, the retracement has been mild in lieu of the market sell off of Friday. Provided, no sellers show up, I´ll be looking for the move to test a small area 1.3060-1.3080, followed by a new attempt in the 1.3120´s, which will make it the 4th time in 5 days.
A longer time frame view provides some perspective: The €uro has been consolidating over higher areas of value 1.2750-1.3150 for almost 2 months now. If we look at the bigger picture, the previous rotations around areas of value usually have developed around a period of 3 weeks to 2 months.
Looking a few months, we can observe that this is also a key area in which price action changed its character, provided fuel for 1200 pip downtrend that lasted almost 4 months.
The area that is being challenged on the upside is key. If buyers show up and manage to break this key selling area with conviction (that is not merely test it) this might open the door for higher areas to be revisted. This would be my bias, unless 1.2755-1.2810 gets contested.
I´ll be looking to posting an update later today, if something comes up.