The move down from the end of June high at 1.26917 to the low reached today at 1.21619, may have reached extreme for now.
- The low today could only extend 4 pips from yesterday’s low
- The price moved back above broken trend line at 1.2181 (connecting low from January 13 and June 1 -see daily chart above). The failure to close below this line yesterday and today is a concern
- The price is back above the trend line resistance on the hourly chart (highs from July 6th and July 10th) at 1.2226 currently
All are positive developments. The bad/the concern is the price broke above the 100 hour MA and 50% of the weeks trading range at 1.22499 area and failed. The hourly bar does not look too encouraging with the failed break and the quick move back lower.
If this move is for real, I would think that traders will not want to see the price decline below the prior highs for the day at the 1.2215-18 area. Staying above might be enough to keep the covering idea in tact, with a move above the 100 hour MA at 1.22499 a confirmation for a test of 1.2286 (the June 1 low). If momentum continues the 38.2% of the July fall comes in at 1.23643.
If the price cannot stay above the earlier lows, I would suspect the longs/buyers that forced the price higher are really not all that committed and those that jumped on the correction bandwagon, look to exit before the weekend.
