“Trend: Price has been captured in a parallel uptrend channel since bottoming in January 2016. More recently a series of higher lows/higher highs since the interim low in late May has re-established an interim uptrend. Price has tested towards LT trend resistance (now around 0.7730) in the recent weeks and the sharp rejections imply that the trend is not ready to extend beyond 0.7730/0.7835. At this stage we don’t consider this to be a threat to the MT uptrend, but most likely an indication that upward progress may remain slow and a period of consolidation / correction will remain in play in the coming days to weeks. The base of the uptrend channel around 0.7360 is unlikely to be breached on a multi-month basis.
Momentum: LT momentum continues to confirm an uptrend bias and the July close in the monthly RSI (not shown here) highlights the fact that this uptrend was accelerating. This close completed a break above a five-year downtrend channel in the RSI and thus highlights the strongest LT momentum upswing in five years into the July close. ST/MT momentum bias is negative highlighting the current period of consolidation/correction.
Outlook: Recent failures around key resistance levels now at 0.7730/0.7835 have placed the interim uptrend on hold. The negative shift in MT momentum is further confirmation. ST risk remains negative and we see this period of ST consolidation/correction continuing in the coming days to weeks. We expect to see strong support towards 0.7360 but need to assess the price response if this level is challenged”.
Copyright © 2016 NAB, eFXnews™
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