Two stories emerge from current prices, the vast majority of our currency pairs are at or near significant break points and to state the best technical analysis terms, those break point levels are danger zones for currency prices. What occurs at my stated danger zones are not only ranges compress but its imperative to watch the most significant points to determine if a break will be seen to further assess if prices drop or travel higher. At significant break points, prices lack trend until a distribution is established. Today’s uncertain EUR/USD for example is either 1.1178 or 1.1089, EUR/JPY is either 121.22 and 121.65 or 115.46. Well here’s EUR/USD in the danger zone at 1.1153 and EUR/JPY at 117.87. Further, USD/JPY is either 103.72 or 109 and the list goes on. Best aspect to the story is volatility is here and will remain.
The GBP/USD story is much clearer than its EUR counterparts as its prices are viewed from its most significant break above at 1.3780. GBP/USD currently trades at the top of the price channel between 1.3416 and below 1.3325. Above 1.3416 then GBP enters danger zones between 1.3438 to 1.3734. GBP lacks trend therefore for the days ahead, its best to trade break points.
To travel higher for example above 1.3416 then next points are located at 1.3438, 1.3461, 1.3507, 1.3598, 1.3689 and 1.3740.
Lower means breaks at 1.3325, 1.3243, 1.3218 and 1.3089. Any price from 1.2900 to 1.3000’s at current juncture then longs is the way. Shorts at 1.2800 to 1.2900’s lacks any serious consideration. To offer what lower means. Last evening bottom overall was located at 1.2527, today the overall bottom skyrocketed to 1.3284. Why 1.3200’s is due to middle ranges. Below then price moves to oversold while above, price not only achieves overbought but the top of the channel and caution for 1.3416.
For today, Bottom is located at 1.3198 with breaks to see bottoms at 1.3231 and 1.3214. What lies just below the 1.3198 bottom is 1.3130. Most significant break points below for today is 1.3325 and 1.3308 to send prices back to 1.3200 again.
As noted from the significant jump from 1.2500’s to 1.3200’s, GBP/USD and all GBP pairs will remain the best trades because it offers the greatest volatility.
Brian Twomey, Inside the Currency Market, btwomey.com