Currency ‘Bomb’: EURUSD pulls back over 400 pips in 3 hours

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.

15 minute chart showing EURUSD's 'flash' pullback

15 minute chart showing EURUSD’s ‘flash’ pullback


Has the direction changed?

No. Some facts from inspection of the daily chart:

  1. EURUSD has pulled back to trend line.
  2. Month-month movement is down (although any change here will be preceded by week-week).
  3. Key question on the week-week: is that a valid bullish expansion signalling a potential reversal or a is that a bull trap?
EURUSD pulls back to downward trend line drawn on daily chart

It’s just a pullback

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.

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One thought on “Currency ‘Bomb’: EURUSD pulls back over 400 pips in 3 hours”

  1. Tamas R.T. King says:

    Price stopped at this point which was also F6 as well as the trend line respecting both.

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