EU Session Bullet Report – EUR/USD Filling The Gap, What Now?

Unexpectedly, EURUSD staged remarkable comeback trading near 1.1280 after dropping to 1.0954.

Action, Reaction, what now? This is the stage we have entered after the Gaps we saw in yesterday’s open. However, in an unexpected manner, EURUSD staged a remarkable comeback and trading near 1.1280 after dropping to 1.0954. Asian markets recovered from yesterday’s bloodbath where major European indices suffered the worst drop since 2011. A similar picture also across the Atlantic where US stocks suffered their worst day in a year.

The strong rebound in the EURUSD was attributed to a variety of factors;

1. Hope that a last minute deal will emerge
2. Intervention of the Swiss National Bank which stepped in an order to prevent a larger drop in EURCHF,
3. Profit taking from EURUSD shorts
4. The inverse correlation of the EURUSD and European stocks (So as investors sold off their shares, they had to exchange these into Euros)
5. Speculation that the events in the Eurozone will force the FED not to hike rates in September so as to safeguard the US economy’s growth
   In china, the sell off is uglier. Major indexes continue to be in a freefall making this the worst month in years. As a result, and combination of all these events, the market is in a risk off mode.

What to watch for today? Greece is supposed to make a repayment to the IMF today worth EUR 1.6 billion by 22:00 GMT. German retail sales and UK Q1 GDP at 08:30GMT will also be key.
As we mentioned yesterday, do not try to understand the market moves as they happen. When fear is the key driver of actions, many times moves will not make sense. Just be prepared for them.

Trading Quote of the day:

“it’s better to lose your opinion, than to lose your money”
– Wall Street adage

Green lines are resistance, Red lines are support

EURUSD
Pivot: 1.113
Likely scenario: Long positions above 1.113 with targets @ 1.128 & 1.135 in extension.
Alternative scenario: Below 1.113 look for further downside with 1.106 & 1.097 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

GBPUSD

Pivot: 1.571
Likely scenario: Long positions above 1.571 with targets @ 1.576 & 1.579 in extension.
Alternative scenario: Below 1.571 look for further downside with 1.568 & 1.566 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

AUDUSD

Pivot: 0.765
Likely scenario: Long positions above 0.765 with targets @ 0.7705 & 0.773 in extension.
Alternative scenario: Below 0.765 look for further downside with 0.763 & 0.761 as targets.
Comment: Intraday technical indicators are mixed and call for caution.

USDJPY

Pivot: 122.7
Likely scenario: Short positions below 122.7 with targets @ 122.1 & 121.7 in extension.
Alternative scenario: Above 122.7 look for further upside with 123.2 & 124 as targets.
Comment: As long as 122.7 is resistance, likely decline to 122.1.

USDCAD

Pivot: 1.238
Likely scenario: Long positions above 1.238 with targets @ 1.245 & 1.2475 in extension.
Alternative scenario: Below 1.238 look for further downside with 1.236 & 1.233 as targets.
Comment: The RSI lacks downward momentum.

USDCHF

Pivot: 0.933
Likely scenario: Short positions below 0.933 with targets @ 0.924 & 0.9205 in extension.
Alternative scenario: Above 0.933 look for further upside with 0.937 & 0.94 as targets.
Comment: Even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.

GOLD

Pivot: 1175
Likely scenario: Long positions above 1175 with targets @ 1184 & 1188 in extension.
Alternative scenario: Below 1175 look for further downside with 1169 & 1162.5 as targets.
Comment: A support base at 1175 has formed and has allowed for a temporary stabilisation.

OIL

Pivot: 59.3
Likely scenario: Short positions below 59.3 with targets @ 57.6 & 56.85 in extension.
Alternative scenario: Above 59.3 look for further upside with 60 & 60.5 as targets.
Comment: As long as the resistance at 59.3 is not surpassed, the risk of the break below 57.6 remains high.

DAX
Pivot: 10800
Likely scenario: Long @ 11016 with targets @ 11285 & 11380 in extension.
Alternative scenario: Below 10800 look for further downside with 10640 & 10435 as targets.
Comment: The RSI has just landed on a support around 30% and is reversing up.