Tuesday's failure to hold above the falling trend line resistance followed by a drop to 7446 adds credence to the bearish price RSI divergence and points to further drop in the prices to 7380 (head and shoulders neckline). A daily close below 7380 would indicate trend reversal and open doors for 7161 (target as per measured height method).
The erratic recovery from 7378 (June 15 low) signals the sell-off from the high of 7599 has run out of steam, although the bulls would still want to see a break above 7530 (falling trend line) before betting on fresh record highs. On the downside, only a daily close below 7449 would revive the bearish view.
The positive action today may force one to question the breakdown seen over the past few days. however, in my opinion the positive move today is a bull trap. The index could be forcing out weak sellers. The doors remain open for a pull back to 7300. Only a daily close above 7500 would signal the pull back has ended.
Repeated failure around 100% Fib expansion level + Bearish price RSI divergence, followed by Wednesday’s gravestone doji candle and a bearish follow through today suggests the spot has topped out at least for the short-run and could test the psychological level of 1.10 levels over the next few days.
H&S breakdown looks like a done deal...is preceded by a bearish price RSI divergence and falling tops pattern. The index ha topped out for the short-term and could extend losses to 7300 once the support at 7354 is breached. The macro side of the story looks weak as well - Pound rallying, BOE tilting towards rate hike + political uncertainty
The pair is extremely overbought…trading above 8/8 Murrey Line. However, the RSI shows room for rally. Hence, a daily close above 1.1285 (recent high) would open doors for a rally to 1.1366-1.14 levels. On the other hand, a break below 1.1166 would add credence to the turn lower from the overbought line and could yield a sell-off to 1.10 levels.
The sharp retreat from the high of 110.34 on the back of weak US retail sales and inflation data has kept intact the falling tops formation on the daily chart. An end of the day close below 109.11 (June 7 low) would open up upside towards 108.13. On the higher side, only a daily close above 110.34 would revive short-term bullish view
The follow through to the bearish divergence has been weak and the recovery from the low of 1.1166 to 1.1220 suggests the drop from 1.1285 was nothing more than a pull back, thus the spot could attempt to break above 1.13 again. On the downside, only an end of the day close below the rising trend line would signal the rally has ended.