Bias: Although there are signs of strong losses we have to be aware of the risk of a larger sideways move
Yesterday's break above 1.4000 came as a surprise and alters the picture slightly, probably bringing it more into line with USDCHF. It could mean a directly bearish picture or we could be talking about a longer correction that could move back to 1.4049-76 once again. I also suspect that even in a correction we may just move below 1.3876... If so then the 1.3810-35 area becomes key and while it holds we can still see a move back above 1.3878 and pivot resistance at 1.3930 to recycle the correction all the way back up to around 1.4008 initially and after a correction to the 1.4049-76 resistance. I feel that will hold. Note next resistance is at 1.4092 and 1.4124. A direct break above 1.3930 from 1.3876 would also provide the same.
8th July: Yesterday's recovery to 1.4049 seems to change the balance of things but still, only above 1.4076 and 1.4124 would imply a closer retest of 1.42 again.
I still retain a strong bearish preference and the recovery to 1.4049 yesterday appears to potentially bring this closer. However, I do feel we should take care in case we see the correction become more complex. Clearly 1.3876 is the next support and I feel that while there may be some consolidation above here initially it has a strong risk of breaking to extend losses to 1.3810-35. This appears to be important and only if it breaks would I begin to look for more direct and aggressive losses. If break is seen then look for 1.3725-47 initially - below opens risk for 1.3601.
8th July: Yesterday's recovery to 1.4049 was not really expected but actually suggests we'll see losses before too long. We still need to allow for a return to 1.4049-76 (even from 1.3810-35) and thus from there, or direct loss of 1.3810 the next targets are at 1.3601 and 1.3525€¦
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