On the daily chart, the price is moving along the upper Bollinger band, while bands start slowly widening. The price remains underneath its EMA130 but above the EMA65, both horizontal. The RSI is growing along its trend line that currently coincides with its longer MA and is likely to be tested shortly. The Composite is moving down to test its MA’s as well. MA’s for both indicators, however, suggest a strength of the market.
On the 4-hour chart, the pair is trading on the middle MA of Bollinger Bands and above its EMA130 and EMA65, both directed up. The RSI represents a very Bullish behaviour since the beginning of November as it cannot fall below its support at 40 mark. It starts diverging with the price but has not formed a clear signal yet. The Composite is approaching its strong support that it failed a few days ago.
Support levels: 87.00 (16 November lows), 86.62 (local lows), 86.35 (38.2% Fibonacci retracement).
Resistance levels: 88.04 (upper MA of Bollinger Bands), 88.83 (EMA130 on the daily chart), 89.25 (psychologically important level).
Open long positions after the price rebound from the level of 87.05 with the target at 87.90 and stop-loss at 86.75. Validity – 1-2 days.
Short positions can be opened from the level of 86.35 with the target at 85.75 and stop-loss at 86.65. Validity – 1-2 days.