Overview:– By analyzing the daily chart of the pair we can see that pair has made a rally from 1.3012 level and was limited to 1.3380 level. Overall bulls were in momentum but it got slow when pair arrived near to 200 SMA line i.e. 1.3310 level. We have seen a tug of war between bulls and bears in the whole month of August, where both bulls and bears were fighting with each other as it is make or break level. If bulls would have given us bullish breakout of this level then we could have seen a strong buying but bears took the charge from this level and it sipped down and marked 3 week’s fresh low.
Technical Analysis:– From technical prospective we can see that two consecutive shooting star candlesticks followed by a bearish marabuzo and a bearish engulfing candlesticks have been posted on the daily chart which is generating bearish signal. A bearish crossover on the MACD indicator with signal line and MACD line is also generating bearish signal. The RSI has turned down below 50 levels which is flashing the downside signal. By applying the Fibonacci retracement line from previous swing’s low to high we can see that pair has retraced exactly 61.8% which indicates that now it’s bear’s turn and further downfall is still awaited.
What next:- Pair has just made a single candle and changed the view from neutral to bearish and sustained below the moving average lines. Overall pair is trading and sustaining below the moving average lines which is generating bearish signal. Below the 1.3200 level we will get further confirmation of bearishness and a daily closing below this level will open the way towards the 1.3100 and 1.3000 level. The 1.3350 level is key resistance level followed by 1.3450 level whereas 1.3150 level is key support level follwed by 1.3100 level.
Fundamental analysis:- The dollars still remains in pressure due to poor ISM manufacturing PMI relased Tuesday and since then most of the pairs where USD is base currency are falling down and where USD is the term currency are rising up. Today the main eyes will be on the ISM non manfacturing PMI (US) which will give the new direction to the pair.
Trade idea:- Based on chart and studies above we can suggest to our readers that go for sell around 1.3250-60 level for the target of 1.3150 and 1.3100 level with the tight stop loss of 1.3350 level.
