Bulls are taking a breather in early Monday’s trading following strong rally last week (up 4.5% for the week, the biggest weekly gains since mid-March 2020).
Last week’s acceleration of the recovery from new 20-year low (0.9535) was mainly driven by weaker dollar on growing signs that the Fed may ease its aggressive approach to policy tightening after US inflation further dropped in October.
Bulls registered weekly close above 1.0308 (Fibo 61.8% of 1.0786/0.9535) but faced strong headwinds on approach to Aug high (1.0368).
Partial profit-taking on overbought daily studies may keep bulls on hold for consolidation, with additional pressure seen from 100/200DMA’s bear-cross.
Broken trendline which marks the upper boundary of bull-channel reverted to solid support (1.0177) which should ideally contain dips and offer better buying opportunities for fresh push higher.
Bulls need clear break through Aug peak (1.0368) to generate fresh signal for extension towards falling 200DMA (1.0433) and Fibo 76.4% of 1.0786/0.9535 (1.0491).
Caution on break below trendline support which would risk deeper pullback and put bulls on hold, with loss of parity zone to weaken near-term structure and signal top.
However, early downside rejection would signal that bulls remain firmly in play for further advance after a brief pause.
Res: 1.0368; 1.0400; 1.0433; 1.0491.
Sup: 1.0300; 1.0197; 1.0177; 1.0138.
