The FX Specialists view – In the FX Specialist Guide we had pointed out a Key Reversal Week that potentially boded bad for bulls. We still believe this to be the case and signs begin to emerge on the Daily chart that back this up.
- WEEKLY CHART:
Key Reversal Weeks tend to be more reliable than key reversal days, and we saw one of the former recently in AUD.
The current risk is to the downside.
On this chart note the first interesting support/target is around 0.8600, the 23.6% retracement. - DAILY CHART:
We have now seen a failure of the shorter term bull channel support today.
The confirming signal would be a close below the 0.8905 02-Nov low.
In the Guide we had already noted a negative RSI divergence that was heralding bull fatigue.
Note lower support coming from the slightly longer term bull channel base at 0.8760 currently, ahead of that 0.8600 23.6% pullback level. - In the Guide we had suggested sales, on the back of that Key Reversal Week, into 0.9300/20. Those now short will now favour lowering stops to 0.9325, targeting 0.8925 for partial profits. Balances may seek to close nearer to 0.8600 – we’ll review this in due course.
- Note: A recent Key Reversal Week seen in EUR/USD was not considered a strong example of one – and this week it was negated. However, there has been fresh failure close to a long term 76.4% level…
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