After some non-directional few days, the move finally occurred, reaching the lower areas of value marked during this week posts.
Yesterday´s US session provided balanced price action in a narrow range. Although tested lower end of range around 1.27200 mark, that level was never breached. Some positive data during Asia provided some footing for a retracement towards the 1.2780 POC, where sellers acted intensively. Price action finally broke into the levels I´ve been watching for a few days. Nevertheless, I did not expect the retracement during Asia on China´s numbers.
What to look for?
– A key swing zone has been breached – 1.2720´s (CORRECTION: previously 1.2750 was wrongly stated, -wich in fact was not a swing spot)
– symmetrical profile usually indicates accumulation/distribution, depending on the context. In this case, distribution after vertical development makes it for a strong downward bias, unless rejection of lower levels is achieved by motivated buyers.
– Vertical development from a previous swing zone over a 100 pip range 1.2750-1.2650 . These type of moves usually witness price rotation that usually leads to “fill” the profile, unless the move develops in such and intense and brisk manner that leaves the profile unfulfilled, which I don´t think will be the case now.
Thus, I´ll be looking for some rotation in the 1.2719-1.2663 area and looking how price action develops to see if this is just a probe/test into lower areas of value or some more downside should be expected. So far, I have not seen the buyer´s response I would like to in order to verify the scneario that this is just a test of lower value areas. In that sense, ragaining the 1.2720 level will be key. POC has shifted down to the 1.2746 area. In the event 1.2720 is regained -I´m not inclined to it, though-, then I´ll be looking towards 1.2746. Provided the move continues down (which I´m leaning into it), the closest POC is at 1.2632 which is also another key swing point.