This week worked out very nice, with the promised dollar squeeze from monday until thursday, with a retrace on friday. The most important for EU bears was the fact that not only 2100 was finally broken, but also 2050 was broken, a support level which was holding for over 2 months! Even with the big retrace on friday, bulls still didn’t manage to break above 2050 and the area needs to be watched early next week also. If bulls manage to stay safely above it, EU might give good short opportunities above 2200 again. If bears manage to stay under, my next bear target will be 1880 and finally 1770.
We will need to figure out if friday’s upmove on EU was just profit taking or a short term reversal attempt. Looking at the dollar price action on the 5m and 15 charts, it looks like profit taking to me, so early next week, dollar should climb back up and re-test its highs from this week. The question is which pairs to focus on and I decided to focus on GBPUSD. Looking at the EG chart, there might be a correction towards 8950-9000, which is not a little one. If EU will be struggling within the current range, GU will be the pair to watch for a drop. Of course, knowing GU, there still might be a spike up on monday, but eventually it should go down towards 3450-3550. There are no big events next week, so moves should be more technical than fundamental. We need to watch the USD chart and how it reacts above 9150, if it gets there, of course. But my USD target is still 9250-9300, so no need to jump on the short side just yet.