Price has formed an inside bar on the daily price action chart of the Euro/Gold chart (Symbol XAUEUR). Price has been in a move lower since price formed a large Bearish Engulfing Bar (BEEB) at an extreme high and once price broke lower, a new momentum lower was in play. In recent days price has broken out of a strong support level inline with the strong move lower and has continued to move south. After making another strong push lower, price has now stalled and this is where price has now formed the price action inside bar with price in a windup/consolidation mode as I discuss more in-depth in the trading tutorial How to Trade Ranging or Sideways Trading Markets.
What will often happen after a large quick move either higher or lower is that price will take a breather and stall like price has done on this daily chart. Price never moves either straight up or down forever and price has to build the required orders to make another move. After making a strong move, the traders who have a made a solid profit will often move into the market to take some profit because until they cash out of their trades the profit they are holding onto is only paper profits. This profit taking will often cause the move to halt or pause. Price can then take some time before it builds the required orders and energy before it then makes a break.
If price can break the inside bar lower and through the windup period, there is then space for price to move into until the next major resistance level as shown on the daily price action chart below. With the Non Farm Payroll (NFP) announcement tomorrow in the US, there is every chance traders may continue to see both this market and a lot of Forex pairs continue to do not too much until the announcement is released. For all the traders looking to make trades leading into this announcement; please proceed with caution because trading into the NFP can be super risky.
Silver/Euro Daily Chart
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