Consolidating week in currencies
This week started with some bold retracement moves but ended in mostly consolidating mode for many currency pairs. We saw the Bank of England slash interest rates by 1.5%, the European bank cut by 0.5%, and Non Farm Payrolls in the US ended the week with worse than expected 6.5% unemployment. Nothing new, my friends. Seems like the beginning of the week many currencies needed to retrace to get out of extremely oversold conditions, and since everyone expected all the bad economic news later in the week, by Wednesday most currency pairs were ready to continue on their trending patterns. EURUSD was able to reach its new monthly pivot at 1.3080 area, but has since slid back down. Now I can see a nice triangle pattern on the 4h EURUSD, support line connecting the lows at 1.2325 and at 1.2525 and again at 1.2650. If this trend line is broken to the downside, then the downtrend will continue, first to test the low at 1.23, then possibly on down to 1.2000. Back above the monthly pivot I may consider some more up retracement, but as long as price remains below it, I will continue to sell it. The USDJPY has been consolidating this week, I found myself buying yen pairs early this week, and then selling them again the latter part. The weekly candle on the USDJPY is a 400 pip spinning top or doji candlestick. What does this mean? It means indecision. My guess is that this pair will continue to range in this area, as long as the important 95.70 is not broken to the downside. Below there and watch out, a test of the low and then further lows can be expected. But remember, if the yens fall, then the world stock markets are also falling, so I will continue to pay close attention. Can the Dow remain above 8500?