
The chart above is a good example of a working Foreign Exchange market in operation. The Euro / US dollar
pair, having reached its highest level for two years, is being forced by some
very large players in Foreign Exchange trading to undergo the kind of
volatility that is normally reserved for more thinly traded crosses.
The high level the pair has
reached is partly responsible for this. A reversal is deemed to be on the
cards, at least by some. Another factor is that price has now reached a Fibonacci retracement
level that acts as a resistance to further advances.
What is important for traders
who do not have the financial muscle to move the most widely and deeply traded
currency pair, but must follow in the jet stream of those who do, is that the
volatility shown on this chart all took place at the opening of the important
markets around the globe. It appears that EUR/USD moved contrary to the
direction held by some very large players indeed, and their stop loss orders
were triggered. This did not happen just once, but on a number of occasions,
causing both long and short squeezes in succession.
The activity shown above also
indicates that this pair is now in relatively uncharted territory and could go
either way. The prudent will wait on the sidelines until one or other tendency
reestablishes itself
Great charts shown here very informative thanks.
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