The EURUSD has started to recover sharply after having a brief dip towards the 1.0200 level earlier this week, with the pair already recovering above 1.0400.
Following the release of the Meeting Minutes the EURUSD pair received a shot in the arm as the Minutes mentioned the Fed looking towards reducing the pace of rate hikes.
The ActivTrader Sentiment tool suggests that only 30% of traders are bullish on the EURUSD. This is great news for bulls if we consider that 70% of traders are short.
As traders, we typically look to fade retail sentiment when it is overly skewed in one direction. This style of trading, fading sentiment, has been one of the most effective and used tactics of hedge funds.
The EURUSD is still showing a large, inverted head and shoulders pattern. The size of the pattern would indicate that the next rally could easily see the pair hitting 1.0800.
It is noteworthy that inverted head and shoulders patterns are amongst the most bullish patterns and these weeks bounce back above the neckline of the pair should be bullish for the EURUSD over the short-term.
According to the daily time frame, the pair is trapped in a large falling price channel and has projection for the EURUSD around the 1.0700 level also at the top of the channel.
Encouragingly, the EURUSD pair actually staged a test of its 200-day moving average this week and bounced aggressively once it tests it.