When I wrote the post I was serious. But it has since turned into a joke
In all seriousness, I think it has a lot more room to the downside than it has to the upside as for potential over the next few days and weeks.
I'm still looking at a big divergence on delta, plus price at the outside of a monthly VWAP, all with a bad European situation that isn't going to get better.
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I have to agree with Fat Tails on this one. This spike up appeared to be another knee jerk reaction to yet another ridiculous announcement today with today's report coming from the Guardian. The tail left on this move looks very bearish since it ran to the 61.8% level from the high of 1.3905 to today's low of 1.3645. I think it's difficult to accurately predict what the market will do day in and day out but I do think Big Mike is correct in saying that there is a lot more down side vs. upside. I expected a hit of 1.39 which was a low volume area and we've reversed from there.
Looking at the USD, this recent pullback has brought the market about half way back off the bottom which should happen in a healthy, rising market. I think we could see the USD get to around the 84 area next should this measured move play out.
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The Euro still shows weakness, no retest of the trendline so far, which was broken on Monday. Monday's value zone - here shown as TWAP, as there is no reliable volume for FOREX - seems to attract sellers.
Also look at the regularity of the decline in the value zones for 6 consecutive days. You will notice that
Zone 6 > Zone 5 > Zone 4 > Zone 3 > Zone 2 > Zone 1
showing that each day the VWAP's advance was smaller showing the weakening of the uptrend. The same weakening of the trend can be seen as a wedge, which formed over 5 days. You do not need any momentum indicators and detect a bearish divergence. Any divergence detected by a momentum indicator can easily be seen on price as well.
The uptrend has now come to an end. This does not mean that a downtrend will follow immediately, but we could also see some sideways action. A retest of the prior highs and/or the trend line is possible.
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