Yesterday's closing for majors were quite bearish suggesting the possible pull-back in the markets. However, as the session kicked off today, majors failed to react to these closing as they continued to soar in the markets to reach even higher levels.
Starting off with the 16 nation currency, yesterday's closing was very bearish as the day ended with a hanging man candlestick suggesting the pair should engage in a downside correction. However neglecting these signs, the pair inclined today to reach a high so far of 1.5060 and a low at 1.5022 as trading during the Asian session was narrow. On the four hour charts, the pair formed a shooting star candlestick supporting the bearish overview that may take the pair to 1.50 and 1.4980 before rebounding back to the upside to continue the bullish laddering formation evident on the four hour charts targeting levels above 1.51. Technical indicators support the decline as the stochastic entered an overbought area providing the possibility for a bearish crossover alongside the RVI.
The Cable reacted similar to the Euro as it too formed a hanging man formation on the daily charts yet appreciated to reach a high so far of 1.6676. We expect the pair to correct slightly to the downside to reach 1.6560 and perhaps extend towards 1.6490 to build a solid base and relieve momentum indicators and start rebounding to target 1.6740 as an initial target. Note that on queue today is the GDP advanced reading for the third quarter in the
The USD/JPY pair reached our intended target suggested yesterday exactly at 91.70 (38.2% correction for the decline from 97.80 to 88.00) to have hit the initial target for the head and shoulders bottom pattern. Failing to maintain levels near this correction took the pair back to the downside where we see trading is currently at 91.60. We believe the pair is to correct to the downside as well to reach 91.30 at the very least before rebounding back to the upside with enough bullish momentum to breach the 91.70 level and target 92.50.