![]() The falling wedge reversal in EUR/USD began a week ago, just ahead of an ECB rate decision where the bank was expected to announce their largest rate hike ever at 75 basis points.ĮUR/USD poked above parity, temporarily, only to snap back-below right around the European Central Bank rate decision. EUR/USD Daily Price ChartĬhart prepared by James Stanley EURUSD on Tradingview EUR/USD Falling Wedge Reversal Falls Flat Meanwhile, sellers had remained very aggressive around resistance or after a bounce, and that led to a more-aggressive angle on the resistance trendline.Īnd this is why falling wedges are often tracked for reversals – expecting the same lack of motivation from sellers at support to – eventually – lead-in to a bullish reversal. Sellers have been more cautious around resistance or at support, leading to a weaker angle on the support trendline of the formation. This is what’s led to the build of the falling wedge formation over the past two months as parity has come into play. This might change your purchasing decisions, right? Unless capital is infinite these changes in prices matter, and this compels different purchasing decisions which can carry a large impact on market pricing.Īnd in markets, this psychology plays out, as we’ve seen, with EUR/USD having difficulty drawing in many new sellers when price is below parity, when the pair feels or looks cheap on a relative basis. This is something many area dealing with at the moment, going to the store and noticing a product that’s 8, 9 or 10% more expensive. If something is cheap, there’s a general proclivity towards buying while something feeling expensive carries a general propensity for selling.Īnd price moves, in general, take time to accept. ![]() ![]() 99 – it feels cheaper, and thus motivates action. And this is precisely why most retailers end prices in increments of. 9900 feels much cheaper than a 1.0100 print. And that relationship spans, so a price of. 9999 ‘feels’ much cheaper than just two pips below 1.0001. The knee-jerk reaction was one of USD-strength and EUR/USD put in that first parity break in over 19 years.īut, as I’ve been discussing, a level like parity will often take some time to leave behind and the reason for this is rooted in the very foundation of human psychology, hence the term ‘psychological level.’ The price of. In July, CPI for June was released to the tune of 9.1%, surprising markets by coming in at its highest level in 40 years. Interestingly – that move was also driven by a CPI print. EUR/USD is back at the parity handle and we’re now at the two month mark, as the initial test below the big figure was on July 14th.
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