Good day to all and happy week ahead. Lot’s of volatility in our past week seeing bulls party all the way to 1.1450 last week but with the bears not having said their last word, the pair ended the week at 1.13 having lost most of its gains!!! The weekly chart shows weakness from bulls and inability to hold above 1.14. The weekly chart is bearish. Trend remains bearish. Trend has been confirmed to stay bearish after challenging important resistance levels.
Price remains below the red trend line resistance and the next target should now be 1.1140 as long as we see no close above the red trend line.
The Daily chart shows the false break out above the red trend line resistance. As long as price remains below 1.1370 short-term trend remains bearish. Support is here at 1.13-1.1285 area and this might be the last stand for bulls. Why? Because this is also the 61.8% Fibonacci retracement level of the entire rise from 1.1175.
This Fibonacci level has so far been respected and price shows signs of a bounce coming. As we previously said, bulls wanted a pull back as a back test and a higher low. The back test pulled back more than expected. However a higher low could also be in place right now. This would be ideal for bulls and the next leg could start any minute to unfold. First sign of strength would be for price to break above 1.1370 and then recapture 1.14 and stay above it. On the other hands, bears want to see price bounce towards resistance of 1.1370-1.14 and get rejected making a lower high. Eventually their bearish view will be confirmed on a break below 1.13-1.1285.
Trading setups. Although short-term trend is bearish, bulls could enter long here with a tight 30-40 pip stop at current 1.13 level. Target would initially be 1.1360-70 with potential of much higher if the bullish scenario plays out. Opening short positions here is wrong unless you are willing to use 1.1450 as stop.