Last Monday’s analysis ended as follows, with little in the way of predictions:
1. The overall picture is confusing, direction is hard to predict
2. There is not much upwards momentum
3. Scalp long trades off the 1.3485 level under relaxed market conditions
Despite the lack of much content, this was actually an excellent prediction, as the price fell to a low of 1.3478 on Tuesday, before rising to a high of 1.3566, providing a possible maximum gain of 79 pips for a maximum drawdown of 7 pips to anyone following our recommendation to go long at 1.3485.
Then yesterday the price again fell, this time to a level 13 pips below 1.3485, before rising by 80 pips at the time of writing, giving a possible second long opportunity from this level.
Turning to the future, let's start by taking a look at the daily chart below, as we have already reviewed the weekly chart this week:
Monday printed a bearish pin par, marked at (1). There was then a bearish candle the next day which bounced up off the support at 1.3485, closing about halfway along its range.
Yesterday was an indecisive, wide-ranging doji candle. This morning has been bullish so far.
There is not any really helpful information to be gleaned from the shorter-term charts.
It has to be said that in recent days the support at 1.3485 and below has been nicely firm. The line of least resistance seems to be bullish, so bias has to be slightly bullish. Having said that, there is little momentum and this pair is in a mood to range. The resistance overhead above 1.3600 also seems quite firm. The question is, for how long will we be bouncing around between 1.3485 and 1.3600? This is the question that is hard to answer. Fading both support and resistance could e a good strategy in the meantime. It is hard to see this pair going much higher than 1.3700 as it has not been that high for more than 18 months.
The next break of support or resistance will most likely be to the upside, but that move is likely to be short-lived. In the longer-term, this pair should move downwards.