On the daily chart, the price is trading just above the middle MA of Bollinger Bands. All moving averages EMA130, EMA65 and EMA13 are directed sideways, while indicator bands are narrowing indicating price consolidation. However, the longer-term descending trend has not been broken yet as the RSI failed its resistance at 70 mark earlier in the month. Both the RSI and Composite are approaching their trendlines so a short-term price reverse is likely within the next couple of days. In addition, the Composite starts diverging with the RSI and the price but indicators have not formed a clear signal yet.
On the 4-hour chart, the price broke down the bottom MA of Bollinger Bands, while the bands start widening. All MA’s are directed sideways. The RSI approached its support that it tested a week ago. The Composite diverged with the price and the RSI indicating an upward correction is approaching. However, the RSI MA’s warn of a weakness of the market so the current direction will likely remain downwards.
Support levels: 0.7197 (50% Fibonacci retracement, EMA130 on the 4-hour chart), 0.7155 (38.2% retracement), 0.7105 (6 October lows).
Resistance levels: 0.7281 (September highs), 0.7383 (psychologically important level), 0.7410 (upper MA of Bollinger Bands).
Short positions can be opened from current prices with the target at 0.7160 and stop-loss at 0.7249. Validity – 1-2 days.
Long positions can be opened after the breakout of the level of 0.7282 with the target at 0.7381 and stop-loss at 0.7248. Validity – 1-2 days.