The development of a elucidates the gradual transition from one market stage into another. The recent reversal from the channel's upper boundary, which also represented a reversal from the 100-day MA (in blue) and the major at 1.41800, highlights the strengthening bias in the short term.
The price action is testing the 200-day MA (in orange) for a second time while also consolidating below the 23.6 per cent level at 1.41114. This represents the aforementioned preliminary stage in the development of a new markdown.
The next major target is underpinned by the 38.2 per cent level at 1.40291, which is currently coinciding with the channel's lower boundary. If the price does not rebound from the two, the downtrend can be extended lower and towards the major at 1.40000.
In addition to its psychological significance (elucidated by the two rebounds in the past), this level also converges with the 300-day MA (purple). Hence, bears should eye the range between 1.40000 and 1.40291 as the first threshold in the development of a new broad downtrend.
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