Analysis of supports and resistances for June 6,2007

A Crazy Day indeed. All the crosses as well as the other currency pairs went crazy today for no specific reason. The stock markets were down today and that seems to be the only factor favoring the correction with no other reason in sight. Is this a short retracement or a huge correction or a reversal in trend? No one can say. We just need to wait and watch.

It cannot be a reversal in trend as there is no fundamental reason for the trend to reverse. So this has to be a correction. But the only unknown factor here is the size of the correction. So what would be the best approach in this situation? For those who have enough money, keep buying the dips but make sure that you space out your entries so that you have enough money to sustain the losses and keep you in the market until it reverses. For those who do not have so much money, just wait on the sidelines to get an idea of the clear direction before jumping in even if it means missing out on 100 pips. Not getting 100 pips is far far better than losing 100 pips.
Supports and resistances would hold good now as well and we need to keep waiting and searching for the support that is going to hold. Till we get that, it is all downhill for now..

There are big technical levels closeby for all the three crosses and so we need to wait and see whether they get broken or whether they will hold. Tomorrow is another big day with the BOE rate decision and a new day with new challenges awaits us. I will be back with my supports and resistances tomorrow and some more thoughts on forex.

Happy Trading!!!