Euro is in a tight range before making a move

As expected eur/usd went down yesterday after ECB chief Mario Draghi started giving a press conference. The move was over 100 pips in over 15 minutes. Impressive! More that type of speeches! Ok, today, if you look at 15 minute chart you will see that the pair is in a very tight range. What does that tell us? That there is going to be a breakout either direction. As we expect the downtrend to continue we are waiting for the low of the range to be broken to enter a short position. Yah, that is a breakout trade and those do not work out that often, but looks like this one will due to the direction and a move up towards the high of the range, which has already occurred during Frankfurt open.

The move will probably occur sometime after London open. On the other hand, we have Non Farm Payrolls (NFP) during US session and as you know these tend to create tremendous volatility across the board. If the move does not materialize by then I will probably remove my short order. On the other hand, smart money can move price down and take profit on the shorts after the release. Anyway, let’s not speculate, but wait for the event and see what happens. 

Pound does not show signs of reversal against US dollar

I did expect gbp/usd to be reversing around the beginning of London open today, but that is not happening. Well, London has just opened so we still have some time for that to happen. The pair currently sits on 200 sma on 4 hour chart and may reverse any time. If it proceeds falling next logical level of support is the low of August 12: 1.5534 level. Below that should be an even number of 1.5500. 

If price does not reverse within 90 minutes we shouldn’t be waiting for a reversal before US session begins. Intra day resistance starts at 1.5600, followed by 1.5620 and then by 1.5640. 

Long term trend is down; intermediate up and short term is neutral. We need to wait for key levels to be reached before start taking bigger positions. If no signs of turnaround are present positions should not be taken. 

There is a high chance that price will keep bouncing between 1.5540 and 1.5690 levels before FED minutes are released. All majors could get a boost from the event and develop some sort of directional bias. 

Anyway, these are my morning thoughts on Pound/US dollar pair. 

Possible support in gbp/usd (1 hour chart)