Recent commentary was that “reversals from wedges are often quick and the target is the origin of the pattern (in this case 1.5221).” The reversal is well underway. Expect a reaction off of 1.5221 but there is potential several weeks out for 1.5400-1.5600 (38.2%-50% of decline). Estimated near term support is 1.5010/40. Another reason to suspect that we head higher from here is the fact that the ‘reasons’ for the advance aren’t clear (once we get the ‘reasons’, it’ll be time to bail on longs).
We were able to catch last week's advance, exiting on Friday. Near term, price is holding 1.5070 so I've started to nibble on the long side once again. This chart offers a visualization of the trade plan from the current juncture. I'll either be adding after a rally to 1.5220 and pullback from that level or a drop into 1.5000.
On the watchlist but not yet active are
EURSEK longs, EURUSD longs, EURAUD longs, EURCHF longs, GBPAUD longs and AUDUSD shorts.
--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com
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