From 108.89 the price dropped an reached the 105.50 level, turning it into a support.
Long-term perspective
After confirming the resistance area of 112.20, the price entered a decline that paused at 106.92 from where a angled rectangle began forming. Its last peak confirmed the upper line of the enclosing channel and also falsely pierced the 109.00 psychological level (108.89 on the chart). This led to a very strong sell that pierced the previous important support of 106.92, which corresponds of course to the 107.00 psychological level. With that level gone, the price had as a next target the important weekly level of 105.52.
Now, as the target of 105.52 was reached, the traders parked their profits causing a retracement that bounced off 106.92, turning it into a resistance. But with such a great volatility, the oscillations should not be taken too quickly into consideration. For the bears the best thing is to wait for the market to calm down and then seek new opportunities as the price confirms — in a less volatile manner — the 106.92 level as resistance. This would target 105.52 an the 105.00 psychological level.
From the bullish perspective, any false break of 105.52 represents an occasion to go long, but with caution as the ones that dominate the market are the bears. In this case, a good target would be 106.92.
Short-term perspective
Plotting a Fibonacci retracement on the decline, it is visible that the 38.2 level — which corresponds to the 107.08 technical level — has been confirmed as resistance. But the expected decline seems to be challenged by 23.6 which wants to play out as a temporary support.
As long as 23.6 holds, aggressive traders may want to go long, targeting the psychological level of 107.00. But once 23.6 gives way, 105.51 will be revisited. But even in this scenario, the price could stop before actually reaching 105.51, thus printing a bottoming structure. The main target for such a structure is the same 107.00 psychological level.
Nevertheless, while the price evolves under 107.08, any approach of this level will be treated by the bears with new shorts. Only if it is pierced and confirmed as support, then the target would be represented by 108.49.
Levels to keep an eye on:
D1: 106.92 105.52 105.00
H4: 105.51 107.08 108.49 and the Fibonacci retracement levels (mainly 23.6 and 38.2)
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