I took yesterday off from trading as it was a bank holiday here in the states, but that doesn’t mean I wasn’t setting up my plans for tomorrow. It turns out that we had a classic use of Fibonacci lines occur within the last 24 hours and I have a graphic to prove it.
Basically what happened during the London session is that the EUR/USD finally broke out of the range that it remained stuck in all last week, and this was due to the latest economic data which puts more rating agencies against the strength of the Euro zone because of its’ various nation’s budget deficits combined with weak German ZEW data and the EUR/GBP sell off. Yesterday I setup my fib levels and when the first reports started hitting the markets around 4:30 a.m. (EST) we saw the EUR/USD tank. We see that the 38.2 level was as far as the pair could retrace from its earlier downtrend before the fundamentals came back into play, thus I expected this move to now drop down to the 138.2 level. This is exactly what happened, a classic use of fib.’s in a trending market. I will post a lesson and video in the coming weeks detailing how you can use fib.’s to predict price action just like I did in this example, so check back soon!
[...] out. This is exactly what I did to predict price action in Monday’s post which you can find here. As far as this current downtrend is concerned, I recommend jumping back into it around the 1.4140 [...]