The week ahead * ???URO update – $EURUSD $6E_F $$ #forex #fx

Sunday´s finds it testing 1.2730´s, almost 200 pips down from last Sunday. Earlier in the week, the pair was contained within a tight range  (1.2780-1.2830) and ended the week touching fresh two-months low at 1.2690´s.-

2012-11-11_2114
I approached last week with a downward bias, although was expecting a bigger move, due to a important economic events and announcements,as was written during last Sunday post.

So far, price as the bottom of a 400 pip range 1.2750´s-1.3175´s 

Unless a see an important, steady and rapid buyer´s response, or prices find a choppy -although firm- footing in this area,  I´ll be leaning towards lower prices.

Below is how the pair finished the week
2012-11-11_2122
Personally, price action was somewhat  disconcerting, and today is little different in the sense that -aside from increased volatility during last Wednesday- the pair has been trading in tight ranges. 

On one side, last week provided the following clues towards more downside:

Price action: vertical development. As previously noticed, I tend to read this type of action as change of perception from market participants towards a different area of value, as noted on the chart below. Usually, the vertical development is followed by acceptance (rotation)  into lower areas of value, after price action again moves again into lower areas of value, in which market players behavior denotes distribution, before moving into lower areas of value.
2012-11-11_2132
Alternatively, rejection of these lower areas of value is followed by either a rapid buyer´s response, thus  driving price into the opposite direction. 
2012-11-11_2216
2012-11-11_2227
Or, the vertical finds acceptance into lower areas of value (accumulation), which are then followed by another vertical development into the opposite direction into higher areas of value.
2012-11-11_2228
This referenced above is the same situation and alternatives I was looking into during the last week and what I am still trying to find clues on regards to price behavior  Looking at the longer term profile chart, the last time the pair was into this area was back in early September and there´s plenty of space for market action to probe into. 

I do not see much until 1.2636, which is a key price point and a POC

The two scenarios I am working with have not changed form last Sunday´s post: 

Unless a see an important, steady and rapid buyer´s response, or prices find a choppy -although firm- footing in this area,  I´ll be leaning towards lower prices.

2012-11-11_2114_001
POC has shifted down to 1.2746

1.2750 is another key price point. For now, if price finds a firm footing above this levels, I do not think the door might open up for the possibility of higher prices. 

1.2790-1.2780 is another confluence area of several POC´s, too. The is the line in the sand for me change with current downward bias. A retracement into that price point could eventually be possible, but would not give it too much room, in order to maintain the downward bias at these levels.
2012-11-11_2154
2012-11-11_2233
Inventories: Long positions have been considerably maintained during last week. Longs are still holding, even against adverse price action. Thus, keeping a same stance, as posted last week.

In lieu of the above, I´m working with some alternatives in which the current situation might be subject to materialize:
a-) The increase in longs against the downmove shows that long inventory is building up even when price is moving against it. Thus, an increase is the participation of buyers will lead to an increase in price for EUR/USD. Since there is no short inventory above it, there would be no clues for me to establish levels in which the price will action will be challenged:

a.1) The move could be short lived, providing a partial retraction in the wake of a bigger downmove.

a.2) Another scenario, would be that this area will mark a temporary bottom, which at the moment I´m not seeing. Price action and an important buyer´s response would be clues I´ll be watching, possibly during tomorrow the morning update.
2012-11-11_2232

 

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