On the Daily chart above, last week, we observed a negative MACD Divergence, which often signals a possibility of strong downward price move. The –ve divergence is still very much intact. Also supporting the bearish scenario is the decisive break below the most recent Daily swing low @ 1.4827 (which we’ve highlighted using the upper blue broken line). Last week Friday, price breached another strong support level – the most recent Weekly swing low @ 1.4625 (which we’ve highlighted on the Daily chart using the lower blue broken line), and barely closed below it. From a day-trade perspective, to be convinced that the 1.4625 support has been clearly broken, we would like to see the bears push further to break the previous trading day’s low – Friday’s low @ 1.4585 (not highlighted).
On the H4 chart above, price broke, at that time, the most recent swing low @ 1.4685 (which we’ve highlighted using the upper blue broken line) downward. That automatically sustained our bias in favor of a downward price move. However, as discussed on the Daily chart, before seeking Short trade setups on the Hourly chart, we would prefer to see price break below Friday’s low – also the most recent swing low @ 1.4585 (which we’ve highlighted using the lower blue broken line).The white horizontal line @ 1.4774 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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