Daily cloud base to cap correction and keep bears in play
The pair bounces on Tuesday after falling to new 2 ½ month low at 109.02 the previous day, as markets recover from initial shock on signals of US/China trade conflict escalation.
Profit-taking boosted recovery that was also signaled by oversold studies and bullish divergence on daily slow stochastic.
Near-term picture is bearish and current action is seen as positioning ahead of fresh weakness, with upticks expected to stay below key barrier at 110.31 (Fibo 38.2% of 112.40/109.02 / daily cloud base, reinforced by falling 10SMA) to keep bears intact, for renewed attack at 109 handle and possible extension towards target at 108.49 (Fibo 50% of 104.59/112.40 31 Jan higher low).
Only sustained break above 110.31 would sideline bears and allow for stronger correction.
Res: 109.76; 110.00; 110.31; 110.71
Sup: 109.60; 109.42; 109.02; 108.49