Littlefish FX | Jan 08, 2013 05:57PM ET
Another quiet day today.
So much so that rumours of a French downgrade circulated before being squashed.
Euro and the Pound took a tumble today on the rumour and on the slurry of poor economic data, although none of this was that key as compared to the ECB meeting alter in the week.
Euro and the Pound remained relatively flat following their initial drop.
BoJ also remained on the wires fuelling more easing rumours.
Despite the rumours price action remained pretty static as the majority of the market is looking for a catalyst to spark the next major move.
EUR/USD
Slight down day for the Euro but it struggled to move beyond yesterdays price action.
Pair finally found support around Fridays (4th) close.
Our strategy remains the same on this pair.
Initial setup offered just about enough of a risk reward ratio to justify a potential long.
We now look for a rejection of resistance or a break to signify a further move to the upside.
It is key that the Euro holds the physiological level at the 1.30 mark, a break and hold below this is likely to push us lower and rejection of this level and holding above this is likely to confirm the Bull trend and test the 1.34 level.
I still suspect this pair is looking for a slight move lower before pushing higher.
However the rejections bode well for a move higher from this level.
As it stands I stand aside this pair waiting for some clearer price action.
Given the amount of Retail traders short this pair and the Kiwi Dollar, I suspect both still have the ability to push higher from current levels.
I currently await a test of upper resistance to set the tone.
A clear rejection of higher prices will put me short, and break through will put me long on a retracement and hold of support.
Don't get too excited just yet but a break lower from the previous mini range set on the Dollar Yen.
If this pair can gather some momentum we could be looking for a retrace all the way back to the 85/84 mark.
Therefore keep half an eye on signs on the 4hr and daily chart either for a push higher again or further signs of a reversal.
The pair really needs a push lower otherwise orders keeping this below the 200 day moving average are likely to dry up.
That said, still like this pair for a move lower off of strong resistance.
Price action since has done little apart from consolidate as the markets wait for a larger risk event.
Still like this for a test of recent highs given the price action, however with other risk on / risk off trading this could get choppy around the ECB press conference.
Still think we could see a push lower but would like to see a break of support on the four-hr. chart to confirm this.
I still like this pair for a move lower but choppy trading means the pair is likely to stop out.
Pusher higher and I would use this to look for short opportunities.
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