Last Monday, our analysis ended with:
"The uptrend is still in place but I am less bullish than I was last Wednesday. The key question is whether we get a daily close first below the support and trend line at around 1.33, or instead above the previous 80 day high at 1.3415. This should determine whether the bullish trend continues upwards to 1.35 and possibly 1.37, or whether we are going back down to 1.32 and points lower than that.
Having said all that, I still remain bullish as the uptrend is in place and support levels have been holding firm at higher and higher levels."
During the few days that have passed since then, we have had neither a daily close below 1.33 nor above 1.3415, so the jury is still out as to whether the bullish trend will continue or reverse. Looking at the daily chart below, it has to be said that the bullish trend is weakening but still intact, as the pair has not yet truly started making lower lows:
Although it is really too early to say with any confidence that the uptrend is over, there have been some bearish signs this week that we can see in the above chart:
1. Yesterday was a bearish daily reversal, only engulfing a small real body from the candle before, but still closing in the lower half of its range.
2. Before yesterday, we can see something very close to a bullish inside bar-pin bar candlestick combination. This was never broken to the upside and has already been broken to the downside, invalidating the combination.
Despite these bearish signs, there was another bullish inside bar-pin bar candlestick combination from Tuesday to Thursday last week. This was broken to the upside and its low has held. Additionally, the support at 1.33 and the trend line have held, and we have not broken the low of last week just below 1.33.
Volatility in this pair has become very low and the rewards for winning swing or position trades also tend to be very low. It is possible to be bearish now early, but technically it is premature. Again, we have to wait for a daily close below 1.33 to be properly bearish or above 1.3415 to say with confidence that the uptrend is taking off again. These are the key levels.
A small move up followed by a successful break of the lower trend line could be the confirmation for a short position trade. For now, it is probably best to watch and wait. There is better short-term action elsewhere.