With today's post -ECB move knocking on the door of 1.1090, we have a critical level of which we can consider trading around.
First off, if prices remain below 1.1090 (the early September low), then it is possible they could retest 1.05 over the coming days.
The simplier result is that if 1.1090 is breached, then it locks in a 3 wave move from August to yesterday. That is important because it eliminates an impulse from August 24 high and elevates the probability of a retest of the 1.17 high.
Bulls need not go blindly in (nor should you ever do so) as another lower probability pattern is that Aug 24-Dec 3 was wave 1 of an . That pattern will likely rear its head around 1.14-1.15.
So bottom line, a break above 1.1090 is reason for bulls to get excited as several patterns point to multiple hundred pips higher.
DailyFX's Speculative Sentiment Index is shrinking as prices have been rising today. This adds more fuel to the story as SSI is a contrarian tool. It currently sits near -1.84 as the number of short traders is growing.
To watch Speculative Sentiment Index in real time, click HERE.
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Lastly, be mindful of the liquidity strains...especially considering tomorrow is a major news announcement. Read more HERE.