The pair breached the resistance for the sideways wave around 135.75 which we mentioned in our Market Pulse report on July 20. The pair is now heading towards the main resistance for the downside wave at 139.15 where trading is still within the descending channel.
Stochastic is in overbought areas yet a positive crossover has been spotted which extends the short term wave to the upside towards the aforesaid resistance at 139.15; therefore, we expect the downside reversal from there to continue the medium term downside move targeting next 129.30.
Note that breaching 135.75 completes a bullish patter which still has upside targets at 140.00 and that ends trading within the medium term descending channel which is supported by the 200 MA and breaching 139.15 and stabilizing above it fails our bearish expectations.
By: Yasir Mubarak
Senior Technical Analyst