Price Alignment Validated on Decline

USD Align With Market Decline

"The probability of returning market volatility after the China market holiday will be in focus as a similar trading scenario could occur upon opening of trading. A probable mirror image of new price cycle with new highs / lows & trend direction is anticipated after the USD Index (DXY) marked a new low @96.25. basis point"... Dated Feb 08, 2016

The Law of Total Probability at times do apply, its knowing how to is equally important!

The relative extension of the USD @95.23 low which fell short of its price objective @95.05; and was traded in two separate occasion. Which had pushed the boundaries for speculative positions out, as the effects of a pullback was eminently proven with the EURUSD, EURGBP and the USDJPY. As stated, the price alignment came through a massive decline across the board which have indicated that a reasonable pause or pullback would occur. Hence, that is what the market has offered on the early trading today.

As we have seen the JPN225 and the Hang Seng (HSI) indeed made a strong come back for the day's trading. As China's holiday proved to be a relief and this is what we meant stating that a mirror-image of the decline would eventually come as soon as China resumes their normal trading sessions.

JPN225

Japan's contraction and a price recovery by the JPN225 allowed the the USD (DXY) to open with a similar GAP pattern which supported an initial lift and a contrary price decline for the EURO & its cross rate. Yes, its after the fact, however the timing couldn't have been more appropriate as the price behavior and action reflected the trade set-up prior to today's session. Most instruments have already marked their respective caps and bottom price levels and expect a wider trading range, incremental during daily sessions yet adding it all up by each week ending can be substantial.

Related Video a Must See: How to measure up a price change or a rebound from a decline