Weekly FX Review - 17 January

‍

The price action here has posted some interesting moves in recent hours, moving sharply off the recent lows. If this was purely random price movement the Bollinger Bands are suggesting that enough may already have been done.

However if these moves are indicative of a more substantial change in the underlying conditions the recent moves higher could prove interesting for the next few days.

As price has just posted a higher low and a higher high, creating a near term positive leg, and has moved back towards the 50% area of the Fibonacci range calculated over the distance of the recent leg lower. Green lines on chart.

Minor term Fibonacci levels are usually less significant than over a major move, but they can still be useful in creating areas of possible interest. The 31-8%-61.8% channel is around 1.1290 – 1.1340. If price action is able to break out of this channel it could provide clues on the next leg.

Due to the Bollinger Bands, and price action stalling for the moment at the natural 50% area, price may have done enough for now and could consolidate in the coming hours. On any such consolidation the recent buyers are less prone to nervousness while the 1.1290 area can hold. However on a break under this area the recent buyers may well exit positions and create additional selling momentum.

Also with the longer term negative trend the bears will still be relatively comfortable with their positions while price remains under 1.1340. Setting up a minor period of consolidation ahead, where this new range of 1.1290 – 1.1340 could potentially be of use in indicating the next more medium term move, which remains skewed to the downside at the moment due to the longer term negative trend.