The transition from the preceding Distribution range, as postulated by the Wyckoff Cycle Theory, into a new Markdown was initiated this week. The catalysis was FED's June meeting and FOMC's decision to adopt a slightly more hawkish policy stance.
After the decision was announced, the price action was able to break down below the psychologically significant support level at 1.40000. But even before that, the price action was exhibiting definite bearish signs.
These included the formation of a Spring above the upper boundary of the Distribution, the initial breakdown and the subsequent throwback to its lower boundary.
Notice that the Markdown is taking the form of a classic 1-5 impulse wave pattern, as postulated by the Elliott Wave Theory. The second impulse leg (2-3) appears to be bottoming out near the 61.8 per cent Fibonacci retracement level at 1.38924.
The price action is then likely to establish another bullish pullback, representing the second retracement leg (3-4). Bears would then have the opportunity to utilise contrarian trading strategies at the resulting swing peak.
After the decision was announced, the price action was able to break down below the psychologically significant support level at 1.40000. But even before that, the price action was exhibiting definite bearish signs.
These included the formation of a Spring above the upper boundary of the Distribution, the initial breakdown and the subsequent throwback to its lower boundary.
Notice that the Markdown is taking the form of a classic 1-5 impulse wave pattern, as postulated by the Elliott Wave Theory. The second impulse leg (2-3) appears to be bottoming out near the 61.8 per cent Fibonacci retracement level at 1.38924.
The price action is then likely to establish another bullish pullback, representing the second retracement leg (3-4). Bears would then have the opportunity to utilise contrarian trading strategies at the resulting swing peak.
