Early last week saw the pair pushing higher and retesting the 0.8600 area which so far for the month of November has held as fairly good resistance with only a few days managing to break above. With the bulls initially taking hold of the market early last week and the bears finally gaining control towards the end of the week, a strong bearish pin bar formed on the weekly charts suggesting we could be in for further selling in the coming days/weeks.
The weekly pin bar was strengthened as it was the final piece of a Hikkake pattern showing a strong rejection of the 0.8600 – 0.8630 area. The pin also managed to close the gap from 4/5 weeks ago, which again strengthens the bearish bias.
We can see from the chart above the 0.8600 area has supported this market for the majority of this year. Late last year the level resisted any move higher, strengthening the significance of this level.
A closer look at the weekly time frame shows a series of lower high’s and lower lows which indicate the market may now be in a downtrend. Should we see the market continuing this pattern and forming a new lower low in the coming week(s) we could expect the bears to take full control and push the price even lower, possibly back down to early 2011 lows.
A quick look on the daily time frame shows the market is in a downwards channel. Although price has not been respecting the upper and lower channel lines perfectly; we can still see the closes of each day have been staying within the levels. Again this further supports the markets bearish outlook at this time.
We will be looking for bearish price action signals on the daily and 4hr chart with the 0.8500 area in mind as an initial target; however should the market continue the way it has for the past few weeks we may see a fall back down to 2011 lows.