Bias: Watch the 1.6263-76 resistance area - which could cap for further losses
The underlying MT direction is neutral while the daily bias is neutral. Therefore it may be better to sit out of the market or trade breaks when supported by bullish or bearish set up patterns. It is advisable to study both lower and higher time frame charts for evidence to support a trade in either direction It may well be advisable to take profits when seen or if there is a larger break out to consider using a trailing stop to protect profits
Consider buy set ups at: 1.6285
Consider sell set ups at: 1.6260-80 or 1.6160
We saw break above the1.6282 high which saw follow-through to just below 1.6343 high before much stronger losses. At this point I feel we may have found an intermediate low, though should allow for 1.6164. I feel a pullback is due that should return back to the 1.6263-76 resistance area which I feel should cap for additional losses. From the pullback or a direct loss of 1.6160 look for follow-through below 1.6138 and 1.6115 and towards the 1.6056-96 area. I somehow doubt we'll see this today but should hold on first test.
Only an earlier break above 1.6285 would imply a return back towards 1.6295-05 - still take care there and at 1.6319. Only above the 1.6343 high would force a stronger rally.
Medium Term Outlook
This lack of upside momentum is not at all conducive to the bullish structure I had been contemplating and I feel there is a growing risk of a larger daily sideways consolidation developing. However, even within this there is still upside potential so there is a dilemma as to how price should unfold in the meantime. If this consolidation scenario is correct the problem with it will be the raised level of volatility and erratic behavior. Thus I feel until some short term developments come to fruition it will be best to hold back from strong directional committments.