Today might be slow due to the US banking holiday but that might be just what this pair needs to settle and complete its correction/consolidation.
We have a monthly 38.2 Fibonacci level tested during this consolidation which was also a previous daily low. This level is clearly a level where traders are managing their positions. I like to sell the break lower for a sell and if it decides to move higher we might see a buy opportunity later on, although I prefer a new low first.
This new low should generate divergence for a possible bigger reversal and buy opportunity. But first things first which will be the possible sell trade for me.
We saw a clear 3 wave correction yesterday before the break lower. I like the previous low taken out for minimum target 165.8.
However price is moving sideways and 166.50 seems to be a strong level. I will closely watch this trade and update tomorrow after some more price action since there are three possible scenario's at the moment and I need to determine which one is the correct one before entering a new trade.
Scenario 1: double bottom and reversal; wait for the break and consolidation for a buy
Scenario 2: this short term sideways price action at 166.5 is only a smaller consolidation followed by a break lower towards my target.
Scenario 3: a more complex correction is underway where A-B-C is only the start in the shape of a larger degree wave A with wave B for the double bottom at 166.5 and wave C next.
I keep my short with stop at break-even for now.
As I mentioned I had my short position open with stop loss at break-even.
This trade reached my target for a 3.4/1 R/R. Nevertheless the biggest trade we don't want to miss has yet to come. I will update this pair later on.