Bias: I look for a reversal from the 1.2529-47 area
Losses developed over the day as expected but the manner of the decline appears too direct for a move through the 1.2530 low. Thus while 1.2674 caps we should see losses down to the 1.2606-15 area again, a pullback and then extension to the 1.2529-47 targets. Look for bullish trade set ups here. Already we are seeing a bulish divergence in hourly momentum so keep an eye out on the 5m or 10m chart. Take care as the move higher may well develop quite quickly.
Even if I'm wrong about the recycling of the correction price should still stall somewhere around the 1.2530 low and see a pullback. If after that pullback the 1.2530 low breaks then the bias will swing towards additional losses. On the way watch 1.2449-55, 123.99 and the 1.2328 low.
Medium Term Outlook:
11th May: Yesterday's price action does seem to lend itself to a clearer picture now. While 1.3086-1.3110 caps there remains risk of losses to the deeper projection at 1.2150. I suspect this will provide a major low. However, take care as a flat correction implying a retest of 1.2530-60 and then retest of 1.3086-10 is possible.
Only directly above 1.3110 would imply the entire decline from 1.5143 may well be complete. First major resistance is then at 1.3350-00.
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. (+130 pips)