Price: 0.7793

Bias: I feel the 0.7919-38 area will cap for a correction back lower

Daily Bullish:
Yesterday saw more range trading and this does place a little uncertainty over the short term expectations but with bearish divergences now in the 4 hour chart I feel that we can still see a pullback lower. The key resistance is at 0.7819-37 which we have tested already. Thus any bullish stance will require break of 0.7840 and if seen the risk will appear to be directly higher to 0.7861 at least - take a little care here - but the larger targets at 0.7919, 0.7954 and 0.7990-28 will begin to kick in.

MT Bullish:
20th May: The rally is on its way and while 0.7616-45 supports there will be further to go. From that support look for gains back to 0.7783 and then towards 0.7917 minimum and more likely to the 0.7990-0.8028 resistance where I see a MT cap forming.

Daily Bearish:
The recent consolidation does make things look more clouded but considering the bearish divergences and the need to see a deeper pullback before moving to the eventual 0.80 target I feel today should prove to be a down day. There is resistance between 0.7819-37 and I look for this to cap and for a pullback lower through 0.7769 to extend to 0.7742 and probably lower. Indeed, this could keep going back to the 0.7668 low and possibly even 0.7629 before it stalls.

MT Bearish:
20th May: The break higher suggests we should be patient for the 0.7990-0.8028 area which I feel will cap for a deeper correction. Only an earlier drop below 0.7615 would imply an earlier decline.

For a full description of how to use the analysis please see the Analysis page of my website. The prior day's set ups for potential trading levels highlighted in the report are now available on the Daily Forecast page of my web site.

I shall be presenting a seminar in Hong Kong on Saturday 27th June at the Excelsior Hotel in Causeway Bay. Please see http://www.earlthorn.com/ for details.