edged higher on Friday, after hitting support at 1.2095. Now is getting closer to yesterday’s high, at 1.2143. Overall, the rate has been trading within a sideways range since Jan. 14, between the 1.2058 and 1.2184 barriers. Thus, despite today’s rebound, as long as the rate stays within that range, we will hold a neutral stance.
In order to start examining the bullish case, we would like to see a break above the range’s upper bound, at 1.2184. This would confirm a forthcoming higher high on the daily chart and may initially pave the way towards the peak of Jan. 13, at 1.2223. If that barrier doesn’t hold, we may experience extensions towards the 1.2284 zone, marked by the high of Jan. 8, the break of which may allow the rally to continue towards the high of Jan. 6, at 1.2350.
Shifting attention to our short-term oscillators, we see that the RSI has turned up and just poked its nose above its 50 line, while the MACD, although negative, lies above its trigger line and points north as well. Both indicators suggest that the rate may start picking upside momentum soon, but as we already noted, we prefer to wait for a break above the upper end of the pre-discussed range before we get confident on decent advances.
On the downside, we would like to see a clear dip below 1.2058 before we start assuming that the bears have stolen the bulls’ swords. This will signal the downside exit out of the range and may trigger declines towards the psychological round figure of 1.2000, which lies fractionally below the inside swing high of Nov. 30. Another break, below 1.2000, could pave the way towards the low of the same day, at around 1.1923.
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