Immediately following the last report we saw prices head off lower and then sideways thus giving cause to the then neutral bullet point and the neutral case itself. This did not last as we formed a mini Double Bottom and prices took off on the upside making fresh highs since the last two years. MAs benefitted and we saw them all head upwards forming a good case for a reassessment at this time to go into mildly or full bullish.
We looked like we might go to the next phase of the market two Wednesday's ago when we had a Bullish Key Reversal Up...but then the song of the market changed. The very next day we did go up and formed a new high but also formed a Bearish Dark Cloud Cover Pattern and a Bearish Spike Top. OK...one bad day does not a bear market make. Then a few days later we had another Bearish Spike Top but with a Bearish Engulfing Pattern and also a lower high.
Last Friday we had a Key Reversal Down on the Daily Chart above. All these despite every MA heading higher. It seems like we have started a topping action. Where now? I suggest we have the proximity of the April and May 2015 highs to thank for that. They seem to be exerting at this time a bearish influence which has seemingly overcome the rally built up since Feb and properly started since early July. The next few days will become quite interesting. What can we expect? If it does follow the bearish scenario then the first test will be the nearby 50% Fib support at 0.7817 followed by the overall move's 50% Fib at 0.7696. If we close below the latter then we have returned to a medium to longer term neutral state from an immediate short term bearish state.
Next major support will be the Medium MA (currently 0.7600) and then the Long MA (currently 0.7553) which if we see consecutive closes underneath would signify a change to a longer term bearish state of the market at that time. If we stay where we are then we could form a Halfway Hesitation for yet another attempt higher or ever possibly a small H+S Top with a Split Head. It is too early to say on these but I would point out the move is seemingly more likely to be short term bearish at this time.
Support is currently at 0.7876, 0.7817, 0.7783, 0.7758, 0.7713 - 0.7716, 0.7696, 0.7608 - 0.7600 (dynamic), 0.7567 and 0.7553 (dynamic).
Resistance is currently at 0.7943, 0.7980, 0.8030, 0.8042, 0.8066 - 0.8074, 0.8162, 0.8233 and 0.8295. With all this in mind I have decided to move the bullet point above into mildly bearish.
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