Some ideas following yesterday´s post in which -following the early morning sell off- price action hoovered around the POC @ 1.2970´s, only to start retracing towards higher areas of value at the end of NY session into the bottom range of the area 1.3015-1.2980, to further retrace into lower value areas, 1.2978-1.2926.
Important sell off started on Asia and has followed in London and US sessions (as it is starting). The weak area in the 1.3015-1.2980 in which it opened back on Sunday, has been recently broken. The down move has stopped right at the POC 1.2968, as noted below. Although overextended, I would be cautious regarding it and would like to some buyers to step in before buying the dip. There´s plenty of space below, as price is currently on the top of a 70+ pip area (1.2978-1.2926). in that case, I´ll wait for the move to get digested before initiating a long position
The move took almost the whole session to get digested with almost no volatility, only to give room to a second leg into lower areas of value, as noted on the chart below.
The title of the post has to do with the accuracy of these areas (marked ex-ante, as consequence of previous areas in which buyers or sellers acted accordingly) almost to the tick. I hardly try to predict here, but work by hypotheses that are later tested by price action. These areas work very frequently and very accurate.
What I´ll be looking for today? Buyers have stepped up as i´m writing this post (8:51ET EUR/USD 1.2948) right the athe bottom range of the area marked yesterday. So far, the pressure has been mild.
Numbers posted previously are still valid:
1.2970 is still key, so 1.2990 & 1.3018
To the downside, 1.29030 & 1.2868.
One scenario has to do with continuation of the vertical development into lower areas of value, via a previous retest of 1.2980-1.3000.
1.2916-1.2890 is a weak area. I do expect it to be penetrated towards 1.2880-1.2844, provided price action continues to the downside.
To the upside, I do not see much until 1.3040-1.3080.