Morning guys,
You probably have signed that liquidity surprisingly has appeared on the markets just from nowhere. It was just few days ago when everybody were running and screaming, searching for the free $$, selling everything that they could. And now - bing! miracle safe, so that everybody have a lot of money to buy stocks. What has happened?
Elections guys... it is three week until US elections. Fed start preparing markets, calming down the households, providing liquidity and turning stocks up. IT so-called pre-elections rally that always happens. Democrats needs to make visual effect at least, and at least for the short term that situation is under control that they are resolving problems and markets once again has turned up - "Vote us!"
Thus, this recent reversal could last for 3-4 weeks and EUR also could climb higher. As market stands above daily K-area and overbought, we should recall weekly resistance that it could try to reach - 1.0280-1.0310. We've talked about it in weekly report.
Meantime, if we would have 3-4 day time frame, instead of daily one, we probably get huge bullish engulfing pattern - take a look at this V-shape reversal:
This leads me to idea that we could watch for pullback and then consider long entry, counting on potential upside extension in a way of AB-CD pattern. For example, if pullback comes to K-support area.
On 4H chart market hits XOP but no interesting reaction has happened yet.
Now, I would say that we should wait for pullback to consider long position. Currently as market is overextended, it is not comfortable to do. For scalp short it is also too early, as no bearish reaction has been formed...