Overview :-From past couple of days we are witnessing very narrow range move in the pair and the way pair is moving on it seems like tug of war is going on. Last Wednesday pair has given us bullish breakout of the narrow range and now pair is trading and moving above the key resistance level of 109.68 level. It has arrived at 6 month’s fresh high of 109.68 level and still sustaining above 109 level which is positive sign for bulls. Well 109 was a stumble block for bulls but that has been cleared by bulls like a cake walk. Overall we can see that bulls are rocking and they are playing at front foot n the pair. Well presently pair is sustaining above the moving average line which is a good news for buyers.
Fundamental analysis: – The pair recently benefited from the US dollar’s (USD) broad strength amid rising calls of a trade deal between the United States (US) and China. However, the recent issues over the Hong Kong Human Rights Act seem to trouble the investors as China has shown its intention to retaliate, not targeting the phase-one, but has refrained from any measures.
Elsewhere, political optimism surrounding the United Kingdom (UK) is facing off-late. The reason being the Prime Minister (PM) Boris Johnson-led Tory Party’s receding lead over the opposition Labour Party’s odds of winning the December election. The latest poll from the BMG indicates half the buffer compared to the previous week’s release. Investors seek fresh clues after the UK PM’s recent public appearances have been criticized.
Additionally, the US Federal Reserve (Fed) officials have been holding their neutral bias intact as they enter the blackout period. With this, traders keep guessing as to whether the US central bank will announce any monetary policy tightening measures or not. As a result, the market’s risk sentiments has been sluggish off-late with the US 10-year treasury yields taking rounds to 1.77% by the press time.
Technical Analysis:- From technical prospective we can see that bulls are forming a rounding bottom pattern where very balanced demand and supply is going on and we are expecting it to arrive at 111 and 112 level in coming trading session. A daily closing above 110 level will open the way towards the 111 and 112 level. Well the way bulls are reacting it seems like bulls will arrive at this level in near term. . A bullish crossover on the MACD indicator is generating bullish signal and RSI is also favoring the bulls for the time being. Presently pair is trading above all the major and minor EMA lines which is providing strenght to the bulls.
What next:- Odds are in favor of bulls. Intraday bias remains bullish on the pair as long as 108.50 level remains intact. A daily closing above 110 level will open the way towards 111.50 level and furthermore in near term
The downtrend on the daily chart which has been breached out and pair is surviving above that level which indicates that pair will test the 112 level in coming weeks.The 108.50 is immediate support level followed by 108 level whereas 111 level is immediate resistance level followed by 112.
Trade idea:- Based on chart and studies above we would recommend that one should go for long around 109.40-50 level for the target of 110.60 and 111.30 sl is 108.50 level.
