Our previous analysis one week ago ended with the following two predictions / recommendations that were relevant to the price action that has occurred since then:
1. We have probably already made the low of this week.
2. A support zone exists from 0.9425 to 0.9388 and it is a good place to look for longs off bullish reversal candles on shorter timeframes.
We were wrong about the low of the week, which was actually made the following day, but we were exactly right on the support zone. The lowest price since the last analysis was 0.9420, unfortunately there were no reversal candles there, as can be seen on the 1 hour chart below:
Turning to the future, let's start with a look at the monthly chart:
Last month produced a bearish pin bar, rejecting the overhead resistance zone and the 50% Fibonacci retracement level of this year's downwards move.
Let's take a look at the weekly chart:
Last week printed an ordinary bearish candle, the only significant development was its rejection of 0.9425 at its low.
Let's take a closer look with the daily chart:
After having reached support at 0.9425 last Friday, action turned bullish, producing the bullish reversal candle marked at (1). Price struggled to rise beyond the resistance level we discussed last week at 0.9520, producing another bullish engulfing bar yesterday, marked at (2). However yesterday's low has already been broken by today's bearish action, invalidating the bullishness. The confluence with the 38.2% Fibonacci retracement level of this year's downwards move seems to be reinforcing the resistance at 0.9520.
From this analysis we can make the following predictions and recommendations:
1. This pair is currently waterlogged, trapped between resistance starting at 0.9520 and support starting at 0.9425.
2. An overall long-term bearish bias seems wise for now, but trading both directions is quite possible.
3. A long touch trade at 0.9388 looks like a very good bet.
4. A short touch trade at 0.9621 looks like a good bet.
5. We need a sustained break of 0.9520 to the upside to take a bullish bias.
6. A sustained break below 0.9388 will be a very bearish sign, but is unlikely to happen for a while.
7. It would not be surprising if we remain largely between 0.9520 and 0.9425 over the next few days.