From investor to a scalper is an analysis cycle in which we take one financial instrument each day and the analysis includes a detailed look at the value from the monthly/weekly chart to the H1/M15.
As a result of growth lasting since May 2011, the market reached level 1.4100, converging precisely with 70.7% of the Fibonacci correction from previous declines, where in January last year there was a supply reaction. For three consecutive months we have seen very dynamic declines. For the next year, however, we have seen growth again, although it was definitely less dynamic and, finally, since May this year we again see bearish advantage.
Looking at the weekly chart, we will notice that the whole, lasting since May 2016 growth movement was within a channel from which we broke down in June. If the current downward trend continues, in the nearest future we expect to be able to test the 1.20 level.
Given that there has been no deeper downward correction during this decline (the one from August did not reach the 38.2% Fibo level) we would expect there would be a demand response and at least a bullish correction.
On the daily chart we notice, however, that even though the course has not yet reached precisely the area around this support, the first demand response appeared already last Friday. So if it turns out to be enough (at least temporarily) to change the market bias, we would expect to re-test the last support (now resistance) converging now with 50% Fibonacci correction from the last downturn.
The technical situation is very precisely aligned with macroeconomic developments. I mean here the fact that the market broke the bottom of the last consolidation, tested from the bottom (as a resistance) its lower limit and on Wednesday, as a result of BoC’s decision to raise interest rates, made another dynamic downward impulse.
The key here is to overcome or reject the nearest local (blue) resistance. If this level was defeated, we could expect to see gains, however, if there is a supply reaction in the area, it could signal continuation of declines and test the already mentioned 1.20 level.
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