Fairly quiet day in the Forex market as there wasn’t a lot of event risk to move price one way or the other. Tomorrow looks more active but I think most traders are sitting idle until Wednesday’s FOMC meeting. As such I’ll just give a brief update on the two setups we’ve been following.
The USDJPY bearish 4 hour pin bar from last week gave us a little more breathing room today, dropping about 16 pips from last week’s close.
The pair stalled some today and appears to be forming a wedge that’s best seen on the one hour time frame. Typically a wedge like this will break in line with the short-term trend, which is down at the moment.
At this point I’m pretty much risk free in this trade so I’ll let it play out. The initial target is 101.50.
I’m still interested in the EURNZD inside bar that formed on Friday. Today we saw the market retest the mother bar low only to close the day 70 pips higher. Today’s move higher doesn’t invalidate Friday’s inside bar setup as it didn’t break Friday’s high. Having said that, each day that passes without breaking the mother bar low does begin to raise some questions as to the quality of the setup.
If the market is able to break Friday’s high then we may see a retest of the 1.576 level before another push lower.
Just remember that only a break of the mother bar low around 1.555 confirms the inside bar as a price action setup. Waiting to see what tomorrow brings.
