The situation is a kind of the most inconvenient for trading. On one hand bulls nicely took the driver’s seat yesterday. On the other hand resistance zone 1.2767-1.2810 was tested already, which is quite capable of triggering a development of corrective movement. On top of this today’s session was opened in the range of yesterday’s daily bar (“inside bar” pattern).
Perhaps the market will choose a scenario of correction to the recent broken high (1.2667) heading from this point to the recent peak (1.2810, blue trajectory). But equally probable appears a scenario with deeper correction to 1.2542 (black trajectory).
Such ambiguity makes to look at today’s trading through the prism of smaller time-frames.
Right now the area of local support 1.2700-1.2710 is being tested. Given that corrective downswing is already formed, bulls can play White and try to trigger a new upward rally from this region (blue arrow).
In case this support proves broken, we would expect deepening of downward correction to 1.2622 (black arrow).
Main scenario: Touch of 1.2700-1.2710 and then growth in direction 1.2810.
Alternative scenario: Break of support 1.2700 and decline to 1.2622.
Above 1.2700 - longs to 1.2810.
Below 1.2700 - shorts to 1.2622.