Overview:- By analyzing the daily chart we can see that earlier pair was heading south side and it’s making successively lower lows and lower highs by getting the supply pressure from downtrend line where each and every candle is supporting the bearish sentiments. Short term to intermediate term trend is down but yesterday after making the low of 1.1957 level we have witnessed a spark in the pair where bulls covered all the losses of the day and resulted in hammer candlestick on the daily chart.
Technical Analysis:- A strong counter attack from the bulls at the bottom end indicates trend reversal signal of hammer candlestick where bulls are leading and playing at the front foot. Downside risk is not over yet we will get further bullish confirmation once pair trades and settles above 1.2350, a daily closing above 1.2350 level break the bearish outlook, however there are high chances that we may see buying till that level without any hurdle. A bullish divergence on the RSI is supporting the trend reversal signal and a bullish crossover on the MACD indicator occurred which is providing strength to the bulls.
What next:- Overall pair is still trading in a downtrend and the weight of bears is higher as compare to bulls so it will take time to turn up the pair, but it seems like this week we will get the bullish confirmation above 1.2350 level.
In our previous report also we mentioned to short the pair from 1.2840 to 1.2500 and 1.2100 level and both targets have been achieved so we are expecting that our readers must have made profit from this move. One more bullish signal can be observed on the monthly chart that a rickshaw man doji candlestick price pattern has been formed which is generating trend reversal signal on monthly basis
Trade idea:- Based on chart and studies above we can suggest that buy pair at current levels i.e. 1.2080-60 target is 1.2350 and 1.2500 sl is 1.1950 level. The 1.2550 level is immediate resistance level followed by 1.2780 whereas 1.1950 level is strong key support level followed by 1.1900 level.
