rebounded strongly during the Asian session Wednesday, after it hit support slightly below the 1.6320 territory, which stopped the rate from moving lower between October 1st and 12th. Despite the sharp advance though, the pair continues to trade below a downside resistance line drawn from the high of October 20th, and thus, for now, we would treat the overnight recovery as a corrective phase of the short-term downtrend.
If the bears are willing to take charge again, we could see another test near the 1.6320 zone soon. A break below that zone would confirm a forthcoming lower low and may target the 1.6255 hurdle, marked by the low of September 22nd, the break of which may extend the fall towards the low of the day before, at around 1.6190.
Shifting attention to our short-term oscillators, we see that the RSI rebounded from near its 30 line, while the MACD, although below both its zero and trigger lines, has bottomed. Both indicators detect slowing downside speed and make us cautious that some further recovery may be in the works before the next round of selling, perhaps for another test near the aforementioned downside line.
Nonetheless, we would like to see a break above that line, as well as the 1.6575 barrier, before we start examining the bullish case. Such a move may encourage the buyers to shoot for the 1.6685 obstacle, which is marked as a resistance by the highs of October 28th and 29th. If that level is not able to stop the advance, the next territory to consider as a resistance may be the 1.6780 area, which is near the peak of October 21st.
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