Monthly Chart
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On a larger scale, the pair has begun a movement in the direction of the senior downtrend, which it had abandoned since April. It is still too early to tell whether the rate will continue the general downtrend when pressures stemming from the senior trend-line take over as the pair moves closer.
Correction to post some gains for short-term bears
Traditionally, the pair should go on to a correction towards the upper trend-line of the broken junior channel, setting 1.0464, the August high, as its next target. Current tests of the level have proven its strength, suggesting that levels above could be unattainable. If the pair is indeed progressing into the retracement, it will continue to fail at the aforementioned level, causing a dip towards the 1.0447 area. A break above 1.0464 would put the 1.0477/79 area into perspective. Various time-frame SMAs lie deep below the current price, elevating the rate and potentially contributing to a trend reversal.
4 Hour Chart
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What speaks in favour of a general bull market is the fact that there might be little downside potential left underneath 1.0228. A close at this level in March and April 2015 resulted in a rebound and the pair managed to touch the area once more this month, just before an immediate rally to distance itself from it.
Not much bullish momentum left to be obtained
Some bearish momentum could be possible squeezed with the help of overoptimistic SWFX traders who bet 70 percent that the pair will surge, confirmed by the repeated proximity to the already steep Upper Bollinger Band. A move south would imply re-entering the most recent channel and repeating tests of 1.0433/31, now from the upside. The support area at 1.0418/19 would provide some demand pressures in order to stall attempts at movements below.
30 M Chart
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There is little space left for further escalation of the bullish trend, meaning that the market could calm and lose some momentum to take on a slightly more flattish path with the help of several corrections and flags.
Nearest fundamental releases are scheduled just next week, suggesting that technical factors could hold strong in predicting future movements of the currency pair.
© Dukascopy Bank SA