With the weakening of the dollar that we have seen since the end of last week, there has been significant strength in this safe haven pair.
On the daily chart above, we can see that price was consolidating below the highlighted region, 0.91800, which was acting as resistance before breaking to the upside with price continuing to push higher until a reversal was seen at the 61.8 fib level. Paying close attention to the downward and upward arrows, we can see how the highlighted region has been offering resistance as well as support but once price broke below the region again, it continued to act as resistance as you can see by looking at the last downward arrow.
One the 4 hour chart above, we can see that one could have gained entry on this pair by looking at the break and retest of the ascending trend line which also lined up with the 61.8 fib level where price created a lower high and went on to create a lower low where the first take profit region has already been achieved. Looking at the highlighted region, we can see that price has been very reactive to the 0.90550 area where price has found support in the past. If we have a 4 hour closure above this level, I would await a pullback using the fib tool to find potential entries.
Later tonight, we have Speaker of the United States House of Representatives, Nancy Pelosi, announcing whether a deal has been reached with Democrats regarding a stimulus package to support American households and businesses. In terms of dollar news for the rest of the week, be on the look out for Initial Jobless claims as well as Manufacturing and Markit Composite PMI’s being released on Thursday and Friday, respectively.
Remember to always stick to your personal trading plan and use the correct risk management. Subscribe to our blog to receive updates sent directly to your e-mail.