Trend like move higher today
Draghi is testifying about monetary policy in front of European lawmakers, and his initial comments are on the benefits from weaker euro and lower oil prices. The upbeat start to his testimony has not scared the EURUSD buyers. The pair is keeping the trend move higher in tact.
From a technical perspective, we are in the midst of the third leg higher in the trend today. The pair has been able to get above the 1.0918 level and it scooted above that level (see prior post) to a high of 1.0940 level. If the trend is to continue higher, the 1.0907-15 is the 3rd leg's 38.2-50% retracement. Holding above it says to me the buyers remain in full control.
In a trending move up (we have 172 pips today), if the smaller "correction zones" - defined by the 38.2-50% of a trend leg - holds, the buyers remain in full control. If the price goes below, it says to me, that the buyers that pushed the price higher on that leg, are not so sure about that last move. We could get some consolidation/corrective action.
Since trends are fast and directional, traders should try to get on trends if they can, and protect against trading against the trend if at all possible (they are where traders lose the most money, the fastest). By applying a fibo to a shorter term leg, traders looking to get on a trend, can buy against the correction zone with a stop below. If already long they can gauge the bullishness and increase confidence in the position. If they are short, they can cut against the area, and look and reevaluate.
So far the trend move up from the London low has three legs and the buyers remain in control.
What is a target level above? The 1.0971 is the topside trend line connecting the high from Feb 26 to the high from the FOMC spike higher last week.
