On the daily chart, the pair opened with a significant gap, broke down the bottom MA of Bollinger Bands and is currently trading below. The price also managed to break down its EMA130 that is directed horizontally, while the EMA65 started turning down. The Composite is about to form a significant Bullish divergence with the price and the RSI. The RSI is going to test its strong support that it could not overcome for the more than a year. However, the Composite suggest the fall can continue.
On the 4-hour chart, the pair is trading below the lower MA of Bollinger Bands, just above its support level at 2.8118. EMA130, EMA65 and EMA13 turned down indicating a direction of the short-term trend. The RSI is in the oversold zone, while the composite reached its lowest point for the history of the chart. Their MA’s suggest a significant weakness of the market.
Support levels: 2.8118 (end of July lows), 2.7784 (active trade), 2.7650 (local lows), 2.7528 (psychologically important level).
Resistance levels: 2.8180 (61.8% Fibonacci retracement for the short-term trend), 2.8417 (local highs), 2.8582 (local highs).
Open short positions from current prices with the target at 2.7850 and stop-loss at 2.8188. Validity – 1-2 days.
Long positions can be opened above the level of 2.8582 with the target at 2.8789 and stop-loss at 2.8410. Validity 1-3 days.