On the Daily chart above, in the past two weeks, we’ve been experiencing a bullish retracement in a strong downtrend. We expected price to move up toward the resistance-confluence of fib 38.2% ret. and the most recent Weekly swing low @ 91.71 (which we've highlighted using the upper blue broken line). However, the bulls couldn’t garner enough strength to push that high: they were stopped about 40 pips away @ 91.31. Currently, buoyed by the longer term downtrend, our bias is bearish. The next critical support level is the most recent Daily swing low @ 88.82 (which we've highlighted using the lower blue broken line).
On the H4 chart above, price has broken the most recent swing low @ 90.35 (which we’ve highlighted using the upper blue broken line) downward. That automatically sustains our bias in favor of a downward price move. The 88.82 support level, which we discussed on the Daily chart, is also shown on the H4 chart (the lower blue broken line). Price is currently more than 150 pips away from this support level; hence, we seem to have enough room to seek Short trades.
The white horizontal line @ 91.31 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact.
However, we still need our Hourly charts – using Fibonacci retracement levels and important resistance levels – to seek promising areas to take our Short positions. Price pattern on the Hourly must also be forming lower highs and lower lows. Please note that our aim is to sell a rally in today’s down-trend.
Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
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