Bias: I suspect a pullback to the 1.4764-97 area before losses back to the 1.4479 low…
Losses were pretty emphatic and momentum remains bearish. However, I feel that while 1.4550-71 supports there is early risk of a pullback higher. A move above 1.4702 (which should initially hold) will extend gains through 1.4731 and into the 1.4764-97 resistance area. This is a critical pivotal area. Given the momentum conditions I feel this will cap for losses right back down to the 1.4550-71 area where a shallower correction should be expected before losses through to the 1.4479 low again. There may be marginal overlap with 1.4436-64 being the maximum I expect. Below there would maintain the downtrend for 1.4396-04 and probably more.
Now, if we get a break above 1.4800 then the picture changes. The 1.4550-71 area is a valid retracement area which could hold if a larger sideways consolidation develops. Then a break above 1.4800 would extend gains, although the risk will be that this is rather erratic, towards 1.4860-80, 1.4916 and then the 1.4951 area.
Medium Term Outlook:
14th May: This steep decline actually looks as if it is part of a larger correction and similar to EURUSD would imply, as long as 1.4436-79 supports, a total recycling of the correction back to the 1.5049 high... A direct recovery would imply a possible triangle and a longer period of sideways movement...
Only a direct break below 1.4436 and 1.4396 would imply direct continuation of the larger downtrend possibly as far as 1.4184.
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. (+160 pips)