Early US hours Tuesday sparked a knee-jerk reaction to 0.9516, levels not seen since March 2018, after the Federal Reserve’s surprise decision to cut interest rates by 50 bps. Following the initial response, the unit staged a modest recovery a touch north of H4 trend line support (blue line), taken from the low 0.9646, and the round number 0.95, though failed to reconnect with 0.96. The relative strength index (RSI) remains loitering within oversold territory, unable to break 50.0.
Price action on the daily timeframe had the pair nudge through the 0.9542 September 21st low (2018) yesterday, likely running a truckload of sell stops in the process. Support at 0.9448 is in sight should we overthrow current support, while further rejection could land the market at resistance drawn from 0.9644.
0.9410/0.9516, which entered the fight yesterday, offers potential support on the weekly timeframe (green) – comprised of a 78.6% Fibonacci retracement at 0.9410, support at 0.9441 and a 127.2% AB=CD bullish correction (black arrows) at 0.9516.
Testing the weekly support area coming in at 0.9410/0.9516, along with price action potentially running sell stops beneath the 0.9542 September 21st low (2018), could spark a recovery in this market. A break above 0.96 would help validate buyer intent. H4 resistance then resides close by at 0.9636, February’s opening level, followed by daily resistance at 0.9644 and then January’s opening level at 0.9671.
Disclaimer: The information contained in this material is intended for general advice only.