Last Friday, the US inflation and retail sales reports were disappointing. This sent the USD tumbling between 70 and 100 pips across the board.
That has ruined the charts as well as the sentiment. Technically, major forex pairs which include the Buck are in no man's land at the moment. On the one hand, the USD has lost considerable ground. On the other hand, you can´t buy EUR/USD or GBP/USD because they have run up too far, so a decent retrace might be due soon.
However, we can´t sell them either because we´d be going against the trend and against market sentiment, which would be quite dangerous according to forex textbooks.
It´s difficult to find good trade setups after strong moves, so at the moment we´re looking at crosses and it looks like there´s a good setup in EUR/GBP.
The Pound rallied for about 150 pips on Friday, showing that this currency is in a strong uptrend. The Euro, on the other hand, only gained about 60 pips against the USD. This means the EUR/GBP extended the decline it had started on Wednesday.
This forex pair declined about 200 pips during those 3 trading days, but today we´re seeing a retrace higher.
The hourly forex chart is overbought since the stochastic and RSI are overbought, but I´m waiting for the price to reach the 50 SMA (yellow) which is waiting around 10 pips higher.
Pick your moving average as a selling spot
The perfect selling spot would be at the 200 SMA (purple) which provided support before it was broken and then turned into resistance.
But, we don´t know if the buyers have the stamina to push that high, so keep following because we might issue a forex signal anytime now.Â
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