A drop back below 1.4840 is our first indication of a move lower. The trend line this move would break is short term and not of high importance. The closest major level is 1.4800. A break below that would be significant.

A break below 1.4800, if it is legit, will find support at 1.4770, 1.4740-1.4730 then 1.4700. If the break is not legit and just a stop run, it will likely tucker out by 1.4780-1.4770 and then reverse. I say that only we because we all know there are a pile of stops sitting down there.

Keep in mind that since we know stop hunting is a common practice, whether intentional or not, and is a strategy in and of itself. If there is a level that is likely to have many stops it, it seems to create a gravitational pull and can result in a quick surge but often retraces. Watch and see if you see this happening around critical levels. If there is interest I can post a article on how to trade this phenomenon. Have a great day trading everyone!

Forex Analysis written by Cory Mitchell, in conjunction with Forexpros