I think it goes without saying that EURUSD stole the show today. Even by late morning the pair was trading well below recent consolidation, but then recovered nearly 160 pips to close the day above the consolidation area.
Today’s price action is very similar to the bearish pin bar on May 5th. This isn’t to say that it will play out exactly the same, but formations like this do repeat themselves so I wouldn’t be surprised to see a strong rally from here.
Because the low of today’s bar is so far away, the only safe way to play this would be with a limit buy order around 1.36 (1.359 is the 50% retrace from today’s low to the high).
Having said that, the highs from the recent consolidation area should provide strong support around 1.364. This leads me to think that we may not see the large retrace many are probably expecting. This would also be similar to the drop that followed the bearish price action on May 5th.
The next key resistance level comes in at 1.3690.
I mentioned in yesterday’s post that this level would be one to watch on AUDCAD. Instead of getting a price action signal to go short, the pair broke through trend line resistance with conviction.
From here we could see the market retrace to the 1.015 level before continuing higher. This isn’t one of my favorite setups on the day, but it could become interesting with the right price action signal at this level.
I tweeted yesterday about the GBPJPY 4 hour bullish pin bar that formed shortly after breaking channel resistance. These formations can often lead to a strong push higher. Although not an overly strong move, GBPJPY has managed to push about 50 pips higher since the break.
— Justin Bennett (@JustinBennettFX) June 4, 2014
Today the pair showed further bullish price action, closing above support. All signs at the moment point to a retest of former resistance around 173.10. Just keep in mind that GBPJPY is a volatile pair and has been known to false break.
NZDCHF tried to regain its footing today but wasn’t able to rally as much as the other New Zealand pairs. This gave us a well-formed bearish pin bar below two levels of resistance.
We may see the market rally some from here before a potential retest of former support at .7485.