Short-term channel trend line breakout (red bold lines) was a signal to the “bearish” mood. Further downward movement led the trading to support 1.2630/20, where the “bears” gained support and raised the price to 1.2680/90, where it still resides. Indicators are uncertain and don’t give sufficient data for the future outlook. Assumptions of the previous comment are still relevant – the price is likely to drop to its local minimums at 1.2590/1.2600 and even to 1.2540/20 if this support is breached. At the same time, the range where the price currently resides has already been registered as a strong support in 2008, and now has all chances to show this quality again. So, there are grounds to be careful and expect a reversal to growth. Upward movement to 1.2760/1.2800 will initiate a high-possibility of new growth in the pair with anticipated level 1.3200, and may be even level 1.3540/50 testing.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst