The Euro returned to red in early Thursday’s trading and has already retraced a half of Wednesday’s 1.5% recovery rally, after traders reacted on oversold conditions.
It seems that bounce was short-lived, as recovery repeatedly failed to clearly break above pivotal Fibo barrier at 0.9732 (Fibo 38.2% of 0.0050/0.9535 bear-leg), generating an initial signal of a bull trap.
Bearish daily studies support the action, allowing limited price adjustments on oversold conditions and complementing strongly Euro-negative fundamentals.
Today’s close below broken Fibo 23.6% at 0.9657 would confirm that bears regained control and open way for retesting new 20-year low at 0.9535, violation of which would risk drop towards psychological 0.90 support.
However, long-legged Doji candle is forming on weekly chart and suggesting that bears may take an extended breather before resuming larger downtrend.
Fibo level at 0.9732 marks solid resistance which should keep the upside protected and guard pivotal barrier at 0.9793 (50% retracement / falling 10DMA).
Res: 0.9732; 0.9750; 0.9793; 0.9812.
Sup: 0.9635; 0.9600; 0.9569; 0.9535.
