Bias: I feel the downside risk is greater but cannot rule out an initial pullback to the 120.20 area
The upside was stronger than expected but the rally stalled just below the 122.48 resistance. I feel therefore that the downside holds the greater risk. The only short term issue is whether the decline resumes directly or after a pullback to the 120.20-50 area... Thus I feel we should consider the 120.20-50 area for bearish trade set ups or a direct break below 118.00-09. Once the decline resumes look for follow-through to 117.32-69 at least - if these give way then the 116.73 area which is my favored target for a correction to develop. Next support is at 116.14.
Only an earlier break above 120.20 and 120.50-71 would begin to suggest a stronger push higher with immediate resistance at the 121.00 pivot area. If this breaks then it should trigger a retest at 121.50-60 and 122.28-48.
Medium Term Outlook:
11th May: While 122.28-48 caps I feel there is risk of a messy sideways correction developing before another break lower.
Only an earlier break above 122.50 would imply a more direct bullish structure..
For a full description of how to use the analysis please see the Analysis page of my website. The prior day's set ups for potential trading levels highlighted in the report are available on the Daily Forecast page of my web site in the Trader Package review. (+170 pips)