Market Update – 11.10.2016

Market Update – 11.10.2016

Crazy moves are happening in the forex market as ranges are still present and this means algo’s are hunting stop losses. The thing is that the US dollar is not breaking and this makes this ranging environment a choppy one, with both highs and lows being broken with no reason for it.

 

Take the EURUSD for example: last Friday it closed at the highs, 1.12, on the back of a miss in the NFP number a bit earlier that day. That move didn’t last as today it was fully retraced. The same happened with the USDJPY pair: Friday it closed below 103 on the back of the same NFP number, only for Monday and Tuesday to retrace the move.

 

It is true that the North American banks were closed on Monday due to holidays both in the United States and in Canada, but nevertheless, traders have been caught on the wrong side of the market. No matter if bulls or bears, if stop loss is not consistent enough, these markets will come for it.

 

And all this is happening with the US dollar still not breaking! What next for the FX markets? Most likely these ranges are going to hold all the way until the US elections due in early November as no one seems to want to take a chance on the US dollar at this very moment.

 

By ranges, I mean 1.1050-1.1400 in EURUSD and 100-104 in USDJPY. considering that now we’re at the upper side of both ranges, I wouldn’t be surprised to see these moves to be retraced, yet again.

 

The rest of the week ahead of us is not having much to offer from a fundamental point of view, with only Friday having the Retail Sales in the United States and Mrs. Yellen giving a speech. Until then, technical analysis should prevail.

 

Speaking of technical analysis, the EURUSD seems to have been broken a triangle to the downside, but I would say this move is a fake one and I’m looking for a nasty retracement back above 1.12. As for the USDJPY pair, if the correlation with the EURUSD still holds for the future moves, then it should head back to the 101 level and start flirting with the all-important 100 level again.

 

The AUDUSD, despite the recent selling, is actually quite bullish and I’m favoring a move above 0.77 in a short to medium term, due to the fact that we’re still in a rising wedge that it is not completed.

 

To sum up, it is still early in the trading week, and chances are that these moves from the start of the week are going to be completely retraced, yet again. Choppy markets until US elections are expected!

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