The cross rate has now accelerated to fresh yearly and multi-month lows, leaving daily studies well oversold and in serious need of a major corrective bounce. In the previous week, we had warned of the potential for another drop down towards the 2010 base by 0.8060, but also said that we would be looking to buy on a dip once this level was broken. The latest downside break has finally broken below 0.8060, and we will look to take advantage of the pullback. There is also now a good deal of previous resistance turned support at current levels, with some consolidation and congestion from back in 2008 likely to prop for the time being. The daily RSI tracks down by 20 and is dramatically oversold, and we like the idea of the fresh long in favor of a significant bounce over the coming sessions. POSITION: LONG AT 0.8050 FOR AN OPEN OBJECTIVE; STOP ONLY ON A DAILY CLOSE BELOW 0.7950.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.