EURUSD move brings SNB shocker to mind
There was a disturbance in the Force this morning. Most currency pairs retraced steeply aggressively not unlike CHF pairs following the Swiss National Bank’s 15 January shocker. EURUSD alone jumped over 400 pips in 3 hours. For this to happen in the most liquid financial market in the world and to the most traded pair (BIS survey, page 5 graph 1) is unthinkable. It is likely that EURUSD has become such a one-way short and probably so highly-levered that initial stop losses were followed by margin calls.
Has the direction changed?
No. Some facts from inspection of the daily chart:
- EURUSD has pulled back to trend line.
- Month-month movement is down (although any change here will be preceded by week-week).
- Key question on the week-week: is that a valid bullish expansion signalling a potential reversal or a is that a bull trap?
I am inclined to wait for this week’s close to determine whether EURUSD will close above or below last week’s high around 1.09. Below, continue to be bearish. Above, be careful of higher retracement.
Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.
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