Attached is the 4H chart for EURUSD. Yesterday, this pair had a huge fall which shows that the ranging which we saw in the high 1.42s was distribution rather than anything else. As can be seen from the chart, this pair moved down a lot and has moved down through several strong supports and has now bounced off support at around 1.40.
Now this presents a very tricky situation for us as it has become difficult to predict the direction. The normal assumption would be that this pair would continue in the range in which it has been for the past 2-3 months and so will continue to range between 1.38 and 1.43, which is what i believe is going to happen.
For today, i would expect a retrace for the big fall down and so i would expect this pair to move to around 1.41 or slightly higher and then have a small move down again. In other words, i would expect this pair to range again.
For today, on the downside, there is support at 1.40 and if this support is broken, then we can see the pair move down to 1.3950 and then 1.39 where a very strong support exists. On the upside, there is resistance at 1.4060 and then a strong one at 1.4120. I would expect more ranging today.
thanks for this one.
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