EUR/USD Daily Update, Thu 05, January, 2012
Good morning,
Yesterday market has confirmed our assumption by solid plunge down, but know is such kind of situation when it is a bit late to enter short, while a bit early to enter long. All that we can do know is to wait a bit.
On daily time frame market probably will create new low, but how deep it will be is very difficult to predict. It could reach just 1.2830-1.2850 area or it could proceed lower to 1.2770 to 1.618 extension of current retracement and create another AB-CD pattern.
On 4-hour time frame trend is bearish, one pattern that we can get here is Double bottom. As you remember, for double bottoms it is very common when second bottom stands slightly lower than the first one and shows some kind of W&R of it.
On hourly time frame there is only single think that could be interesting for us - negative dynamic pressure, that suggests some downward continuation.
So, as a conclusion we might say that downward move should continue, but how deep it will be - I don't know yet. That's why we have to watch closely just to not skip triggering bullish pattern. It does not mean that we have to catch buy right at low - we will have enough time to enter at retracement after it will be completed, it just means that we have to recognize it.