Overview:- Pair is showing roller coaster move on daily chart. Initially it moved up to 1.2819 level then reversed down to 1.2340 level where bears ensured to everyone that trend has been changed from upside to downside and then our strategy was to sell on high. Few days back we are buying the pair from intraday point of view and it bounced from 1.2340 to 1.2540 which was mind blowing move of 200 pips.
Yesterday after arriving at 1.2540 level pair slipped down to 1.2504 level which confirmed our bearish move. So here we would suggest our traders that go for sell on every bounce. Today at the time of writing pair is trading at 1.2460 level which is perfect bounce from intraday point of view to short the pair.
Momentum is favoring the bears now and it seems like pair has formed a top of 1.2812 from intermediate point of view and other indicators and oscillators are also supporting the bears.
Fundamental Analysis:- US dollar benefits from broad risk-off moves amid trade, virus fears. Market watchers may now keep eyes on the UK’s reaction to the bloc’s step forward as well as the trade-negative signals from the US to determine immediate pair moves. Also important will be the US pandemic updates and latest data concerning the Jobless Claims and Durable Goods Orders.
Technical Analysis:-
From a technical perspective, we can see on 4 hourly chart an uptrend line has been breached out and presently pair is trading in purely downtrend channel where purely balanced demand & supply is going on. However we will get further bearish confirmation once pair trades and settles below the 1.2400 level on hourly basis and then the 1.2300 and 1.2200 level seems as soft target for bears. On contrary a daily closing above 1.2550 level will change the outlook from bearish to bullish and then pair may go up to test the 1.2650 and 1.2750 level however the chances are very less for this event.
Odds are in favor of bears we will keep our view bearish as long as 1.2550 level remains intact on positional basis..Overall the pair is trading below all the major and minor EMA lines which are supporting the bears. The RSI is seems negative on the Daily as well as 4 hourly chart and a bearish crossover on MACD is also the favoring the bears on 4 hourly chart which is a recent development.
What next:- The 1.2550 level is immediate resistance level followed by 1.2650 whereas 1.2300 level is strong key support level followed by 1.2200 level.
Trade idea:- Based on chart and studies above we can suggest that sell the pair at .12450-60 at current level for the target of 1.2300 and 1.2200 with tight stop loss of 1.2550.
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