Now that we have seen how and why EURUSD reached 1.4030 from a technical perspective, lets discuss about the future direction of EURUSD. Having watched the price action in EU over the last few days, let me accept that i am surprised about one thing. I really did not expect EU to break the resistance at 1.4030 so quickly. I expected a better retracement and i expected the consolidation to continue for atleast a couple of weeks before the resistance was broken. But in any case, those who have been following me on twitter would know that i did not ever go against the trend and hence did not short EU and hence did not lose anything.
So, for the future, i do not see any technical resistance for EU till 1.4220. Since things are not so straight forward as they were when EU was at 1.33, we would have to trade this pair from one resistance to the next rather than going for any long term, big yielding 1000 pip trades. So, the next fair target for EU longs would be 1.42. With the big resistance at 1.4030 being broken, i would expect that any retracement towards that would be very heavily bought.
For me, the more interesting pair is GBPUSD. This pair has been in a tight range for quite some time and this means that the traders are not quite sure what it is going to do. Fundamentally, no one is still clear whether BOE would go for the next round of QE or not. Some people say yes, some people say that they might not and hence, the confusion and the ranging. Technically, this much is clear. The kep level is 1.6020. If this is successfully broken and re-tested, i would expect this pair to move to 1.64 and on the higher side, i would expect it to even move to 1.70. Fundamentally, this can happen if there is a clear signal from the BOE that they would not go for QE. Hopefully, this will become clear when the minutes are out at around the 20th of this month. Till then, watch out for the break of 1.6020 and be ready with your longs. Happy Trading !!
Do follow me on twitter (http://twitter.com/ns_karthik ) where i post some of my trades in real time.
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