The pair stands at the back foot on Tuesday and extends pullback from new recovery high at 107.77, to probe below key support at 107.07 (daily cloud base).
Monday’s close in red completed reversal pattern on daily chart, with close below the base of thick daily cloud needed to confirm and signal further weakness.
Daily bulls which were built on recent recovery rally are losing traction and 14-d momentum is in steep descend and about to enter negative territory, which could further boost pullback.
Extension on firm break below cloud base would open way towards strong supports at 106.60 zone (higher base, reinforced by Fibo 38.2% of 104.63/107.77 recovery leg) loss of which is needed to confirm reversal.
Conversely, close within daily cloud sideline immediate downside threats, however, close above cracked Fibo barrier at 107.56 (50% retracement of 110.48/104.63 bear-leg) is required to generate initial bullish signal.
Meeting of US President Trump and Japan’s PM Abe is due on Wednesday and will be closely watched for fresh signals.
Res: 107.16, 107.56, 107.77, 107.97
Sup: 106.60, 106.45, 106.20, 105.83
