Bears pressure key support and look for strong signal on close below weekly cloud base
Bears are taking a breather above new multi-week low at 0.8865 (the lowest since Nov 11) following a steep fall in past six days.
The Euro lost traction and was additionally pressured by political crisis in Italy, while sterling remains at the front foot despite Brexit consequences and new lockdowns.
Technical studies on daily and weekly charts maintain strong bearish momentum but oversold conditions warn that bears may take a breather before probing through key supports at 0.8860/32 (Nov 11 low / converged 100/200 WMA’s).
Bears cracked strong support at 0.8887 (weekly cloud base) and weekly close below here would confirm strong bearish stance and likely accelerate the action.
The pair is on track for the biggest weekly loss since the last week of March, with bearish engulfing pattern forming on weekly chart that would add to negative signals.
Firm break of 0.8860/32 pivots would open way towards 0.8746 (50% retracement of 0.8281/0.9499 rally) and Apr/May higher base at 0.8680 zone.
Low of Dec 31 (0.8932) offers solid resistance and guard falling 10DMA (0.8974) which should cap extended upticks.
Res: 0.8890; 0.8915; 0.8932; 0.8974
Sup: 0.8860; 0.8832; 0.8800; 0.8746