We established a fresh long position earlier today and on an intraday basis we are certainly taking a bit of a beating right now with the market dropping to fresh multi-month lows below 0.9680. However, with that said, we continue to like the idea of the formation of a material base by current levels and see the risks for additional setbacks from here as limited. Our stop-loss has been placed accordingly and we expect to see some bids emerge into the mid-0.9600 area. Retail traders had been long at a dramatic 10:1 and this is on the surface a bit discouraging, but the fact that the market has moved lower and the ratio is dropping (instead of building) tells us that these traders are getting taken out and giving up on the long. This is what we like to see as it suggests that the market could finally be poised for a major bullish reversal. We have also noticed (thanks to the insights of a loyal follower), that the daily ATR is near historic lows which implies a major breakout in volatility. Again, given that we see the market trading by cyclical lows, we project that the price direction through this volatility will be to the upside. POSITION: LONG @0.9712 FOR AN OPEN OBJECTIVE; STOP 0.9562.
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