The pair is in defensive in early Monday’s trading despite strong bullish close on Friday and rising positive momentum on daily chart.
Recovery from new multi-month low 102.59 (Jan 6) was capped by daily cloud base, as descending cloud is thickening and continuing to weigh on near-term action.
Two consecutive long-legged weekly Doji candles in past two weeks signal strong indecision and return of dollar’s weakness adds to risk of further weakness after recovery stalled at 104.39.
The action of past four days is holding between daily Tenkan-sen and Kijun-sen, with Tenkan-sen heading south and adding pressure.|
Expect increased downside risk on close below Kijun-sen (103.49), also 50% retracement of 102.59/104.39 recovery leg and test of pivotal supports at 103.32/28 (last Thursday’s spike low / Fibo 61.8%) loss of which would signal an end of corrective phase.
Conversely, close above Tenkan-sen would ease downside pressure and keep in play renewed attack at daily cloud base (103.95).
Res: 103.76, 103.95, 104.08, 104.19.
Sup: 103.67, 102.49, 103.28, 103.01.
