The Market Is Still Hungover From Last Week
Skerdian Meta • 2 min read
Good morning to all our FXML followers! I hope you´re having a great morning and a good start to the new week, because the forex market doesn´t seem to be having one. From what I can see in the charts of the major forex pairs, the forex market still seems hungover from last week.
We know what happened last week; the Republican candidate won the US elections, which took an unexpected turn after Donald Trump triumphed in a landslide victory. The market had a moment of panic in the first few hours after Trump´s victory became clear, but soon the market sentiment reversed. The market quickly realized that Trump´s victory would be positive for US growth and obviously the USD for a number of reasons that we explained in our market analysis section of last week´s review. The USD made an epic comeback.
It seems like the hangover has spilled into this week as well. Last week USD/JPY reversed after reaching 101 on Wednesday morning and it started a strong uptrend, but it wasn´t able to break above the 107 level, despite knocking on its door for the last two trading days. Today, though, that level was broken in the early hours of the morning and we´re now about 100 pips higher.
Don't try to catch a falling knife, guys.
The same goes for the EUR/USD; this forex pair fell for nearly 500 pips last week as we can see from the chart above, but the 1.08 level was a tough support level since it has held the price above for the last 11 months. Well, that level is history now since it was broken overnight without much of a fight.
We´ll have another, more detailed look at this forex pair later on today, but I can say that the sentiment is quite strong and the moves are pretty big. So make sure to keep the trade size manageable.