Richard Perry
Independent Analyst
Once more it looks like the beginnings of a correction may be taking hold. Yesterday's intraday gap down following the weekend was bearishly filled before falling once more. The daily chart now shows a key high potentially having been left at $1.3905 and a drift lower which may just now be seen. Momentum indicators have begun to turn lower once more with a crossover sell signal on the Stochastics, suggesting a near term correction. The intraday hourly chart shows the potential for a correction in more detail. There is a top pattern that has formed on a break below $1.3830 which gives an implied target of $1.3765, whilst the breakdown of the support at $1.3830 has acted as a basis of resistance overnight. It is worth keeping an eye on the falling 21 hour moving average which had been an excellent basis of support through the rally, however since the correction has set in, it has become the basis of resistance, currently at $1.3819. Look to use any move towards the $1.3830 breakdown as a chance to sell today. The risk to this is a strong German ZEW number or more significantly a weak print for US inflation.
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