Bigger Picture Breakdown Potential explained by professional Forex trading experts the “Bigger Picture Breakdown Potential” FX trading team.
Bigger Picture Breakdown Potential
we looked at EUR/JPY after a key level of resistance came-in around 134.41, just ahead of the October ECB rate decision. This was a key level for a number of reasons, as this is the 61.8% retracement of the 2014-2016 major move in the pair; but perhaps most importantly, this price had helped to turn around EUR/JPY’s bullish advance in September. Over a two day sequence traders had tried to break prices-higher, each of which failed. And when price action re-approached this level a month later, the same began to show as sellers populated the pair and started to push prices lower. As we advised, even though this was a fresh one-year high in EUR/JPY, traders would likely want to wait before trying to push the long side ahead of a critical ECB meeting.
In the immediate wake of ECB, prices moved down to the zone of support that we’ve been following that runs from 131.71-132.05. The level of 132.05, in particular, is interesting as this is the 50% retracement of the 2008-2013 major move. This zone of support has helped to hold the lows in EUR/JPY for going on six weeks now. But rather than bouncing as we’d seen for much of the previous seven weeks, price action drove deeper. Bulls came-back shortly after, but the fact that support was beginning to give was notable.
Bigger Picture Breakdown Potential Conclusion
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