- Weekly and Daily: Before discussing the short-term scenario let’s take a look at the longer term mode. The Weekly chart shows a market in the oversold condition as it consolidates around the 61.8% retracement level.
- If a rally springs from this small base, there is resistance near the 128.50 area. However, there does not seem to be a reversal signal yet, and the bearish outlook exists. The market can test the 118.34 or 78.6% retracement level in another bearish week.
- The daily chart shows trouble rallying above the 123.80 level. The stochastic is showing a strong bullish momentum from basing action, but price action is showing trouble with a declining trendline as well.
- Despite the bullish divergence, this combination is bearish.
- 4H: The 4H time-frame shows a slight bearish divergence with the stochastic, and the oscillator has shown an early momentum reversal signal. Also, the market is testing its SMA200 as well as the consolidation channel resistance, and the 78.6% retracement level.
- Also the current price action may be forming a double top if it breaks below the 123.00 area. A breakt below the rising trendline should hint at further decline towards the 118.34 area. (78.6% retracement seen in weekly chart).
- If there is a break, there might be some near-term support at 121.50 area. Look for a pullback and if it is weak, anticipate the next bearish attempt to break below the 121.50 area.
Fan Yang
Currency Analyst
Commodity Trading Advisor
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