I posted the following on Twitter the other day, in prep for the 3100 handle getting approached. I did not, however, anticipate it happening this rapidly until I took a deeper look at charts last night. We broke through an upper trendline within the existing EUR/USD downward move and couldn't make it up to the spike base circa 1.3250. We topped out the golden ratio, again, of the break itself (see line marked A).
— Steve W (@nobrainertrades) September 3, 2013
The measured move from line marked B is what I posted to Twitter. Couple things worth noting here:
Yes, you bet your rear there are a lot of order flows surrounding the 3100 handle. Whether stops or limits it doesn't matter. They are going to attract interest and pull price towards them. I knew there would be protection ahead of this level because part of that component is undoubtedly stops, which almost always see fighting directly ahead of them. There was also a large option ex being talked about around that level, though I can't in good judgement put a lot of weight on that.
1. Draghi's comments were decisively dovish this morning and
2. There is far too much juice underneath this level to be ignored.
So next steps:
1. remain short bias anticipating levels in bullet 2 – I am mainly basing this on major EUR strength today and a lack of support at this level. It has been 3 hours and we've only pulled back about 15 pips. If it DOES hold then c'est la vie – it might want to do it regardless ahead of nonfarm.
2. if we do seek to go long I want confirmation in the form of a trendline break and retest 1.3085 area is the first major pivot, then 1.3065, then right at/slightly above 1.3000.
3. patience for payrolls. too much on the plate to be taking anything longer term, fresh, in the immediate future.
But anyway, these are the moves, how they were located, etc., etc., etc. But as you can tell, my confidence isn't racing on this one today and better off looking elsewhere at these levels, or until something else shows its face.
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