Yesterday’s FOMC didn’t have much of an impact on the market, at least not on the EURUSD. You could argue the outcome was priced in for the most part.
However, market reactions aren’t always on time. Sometimes it takes a day or two before participants are ready to commit themselves one way or the other.
Markets are also never static. The never-ending flow of news and positions means things can change fast. It’s why I’m always preaching the importance of staying as neutral as possible. At any given time the market can give you a massive clue about its likely future direction.
Yesterday I mentioned that buyers’ resolve would be tested at 1.1700. The area was either going to trigger a bounce higher to 1.1830 or fail and expose 1.1530.
So far today, 1.1700 is failing. Sellers have cleared the area on a 4-hour closing basis. If you look at the 4-hour chart, you’ll even see where 1.1695 – 1.1700 was retested as new resistance just a few hours ago.
It’s an interesting development for sure. What’s just as appealing from a bearish perspective is that the market is about 50 pips away from carving a bearish engulfing week. We’ll have to wait and see how Friday plays out.
You may recall from yesterday’s commentary that a close below 1.1700 would re-expose the 1.1530 support handle. As long as sellers can force a sub-1.1700 daily close (using a New York close chart), the 1.1530 area appears to be the next stop.
If EURUSD loses 1.1700 on a daily closing basis, it would also negate the idea of an inverse head and shoulders. Just keep in mind that a lot can happen between now and 5 pm EST, so stay diligent.