There was a recent buy signal around the 15.25 area and now price appears to be hesitating off the 18 area resistance. This type of price action is not unusual since it is possible that it can be unfolding into a Wave 4 consolidation. These are often NOT simple corrective patterns and can probe as low as the high of Wave 1, and still maintain a broader bullish outlook.
For our purposes, we would measure risk from the 12.85 area support, meaning if price closes below that, it is probably a good idea to limit risk or exit a losing trade and wait for a new buy signal. As long as price maintains stability between 12.85 and the 18, it can develop into the Wave 4 consolidation which often leads to trend continuation or Wave 5.
Based on a price projection measured from the current bullish structure in play, the 25 level appears to be the next proportional inflection point. This means if it breaks out, it would be a good idea to distribute targets between the 20 and 25 area.
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This article was written by Marc Principato CMT, Executive Director at Greenbridgeinvesting.com.
This article was originally posted on FX Empire