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Daily Forex Market Commentary:
On Wall Street today stocks were mostly flat, the Dow closed down 18.97 points. The stock market will likely be subdued until Fed Chairmen Bernanke testifies before congress on Wednesday.
Investors are waiting to make any significant decisions until the Fed Chairmen clears up the reasoning behind last week’s surprise discount rate hike of .25%.
Currencies:
The currency markets were pretty tame today. Most of the major FX pairs had very quiet trading sessions, the EURUSD and GBPUSD both had trading ranges under 90 pips today.
U.S. Fed Chairmen Ben Bernanke’s testimony before congress on Wednesday of this week will likely be the next big catalyst for movement in the major forex currency pairs, until that time we are likely to see more sideways consolidation.
Currency pair in focus: GBP/USD
Today we are looking at the daily chart of GBPUSD. An inside bar formed today and there are two possible scenarios we are going to look at for trading off of this inside bar setup.
First, since the overall trend is down this inside bar could break to the downside, resuming the overall down trend. Price action setups taken with the dominant trend usually work the best, inside bar setups are especially great as trend continuation signals.
Alternatively, this inside bar may pop higher and push into the confluence zone as marked on our chart. This confluence zone is a strong area of resistance that was previously support, it also coincides roughly with the Fibonacci 50%-61.8% retracement level, as such, it would be a great area to watch for bearish price action setups to form at.
For a more in-depth analysis of the major forex currency pairs as well as price action education check out my price action trading course.
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