Bias: As long as 1.2240-50 can support I feel the upside can develop once again
Losses came as expected but actually even stronger than expected. However, cautiously I feel they are close to completion. While 1.2310-20 caps there is room for one more dip to the 1.2240-60 area. Note the bullish divergence in hourly momentum developing. Thus look for bullish trade set ups in the 1.2240-60 area. From here a break back above 1.2320-30 to the 1.2350-71 area. This should cause a correction. Once complete I feel the upside will follow-through above the 1.2415 and 1.2445 corrective highs and back to the 1.2480 pivot resistance. Take care here. Above is 1.2562-96 and the 1.2670 high...
A Therefore, only a break below 1.2240 would begin to concern and while we still need be cautious the risk would then be lower for 1.2204 and 1.2165 to retest the 1.2143 low. Below there are potential supports at 1.2063-91.
Medium Term Outlook:
21st May: Yesterday's follow-through higher was encouraging but as of yet not really enough to identify how this pullback will develop. I feel today will hopefully provide a little more information. For now, any upside should find a barrier in the 1.2693 - 1.2737-60 area.
Only a direct reversal back below yesterday's low is going to maintain the decline. Below there is 1.1960-80 and 1.1774 ahead of the big 1.1640 swing low.
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. (+70 pips)