0.92 In Focus: Imminent Reversal or New Lows Ahead?
Are we about to see a double bottom reversal, or will price break down again?
Going back to my idea posted in December 2023 (see related post), we had a great buying opportunity on the dip below 0.94, followed by a strong rally towards parity, falling just 80 pips short.
That upward move ended in May, and since then, the price has broken down again, with last month taking out last year's low, hitting a new all-time low at 0.921. So, what’s next?
Will the price continue to break down, or are we seeing signs of a double bottom reversal on the weekly charts? Let’s break it down.
On the weekly charts, after hitting the new low last month, we saw a strong reaction with a nearly 360-pip rally before the price broke down again. Zooming into the daily charts (image below), it looks like we could see a move back down under 0.93 into the marked buy zone.
Looking more closely at the daily chart with the MACD indicator, there are signs of a double bottom pattern forming, along with bullish divergence, signaling a potential buying opportunity on dips below 0.93.
Supporting this further, divergence signals are also forming on the 4-hour charts (see image below), with the price slowly grinding down while the MACD moves higher. This is clear evidence that momentum is slowing as we approach a key higher-timeframe area of interest.
Given these signals, I expect one final breakdown under 0.93, followed by a strong rally. However, I won’t be blindly entering buy trades here.
Instead, I’ll wait for the final push down and look for BUY signals on my TRFX indicator from the 4-hour to daily timeframes, with the strongest signal likely appearing on the daily.
If this setup plays out, I fully expect a move back up to test parity, with my first target being last month’s high at 0.958, where we could encounter some resistance. The second target will be the 2024 high at 0.992.
For this setup to be invalidated, we would need to see a clear weekly break and close below 0.925.
Let me know your thoughts below! :)
Going back to my idea posted in December 2023 (see related post), we had a great buying opportunity on the dip below 0.94, followed by a strong rally towards parity, falling just 80 pips short.
That upward move ended in May, and since then, the price has broken down again, with last month taking out last year's low, hitting a new all-time low at 0.921. So, what’s next?
Will the price continue to break down, or are we seeing signs of a double bottom reversal on the weekly charts? Let’s break it down.
On the weekly charts, after hitting the new low last month, we saw a strong reaction with a nearly 360-pip rally before the price broke down again. Zooming into the daily charts (image below), it looks like we could see a move back down under 0.93 into the marked buy zone.
Looking more closely at the daily chart with the MACD indicator, there are signs of a double bottom pattern forming, along with bullish divergence, signaling a potential buying opportunity on dips below 0.93.
Supporting this further, divergence signals are also forming on the 4-hour charts (see image below), with the price slowly grinding down while the MACD moves higher. This is clear evidence that momentum is slowing as we approach a key higher-timeframe area of interest.
Given these signals, I expect one final breakdown under 0.93, followed by a strong rally. However, I won’t be blindly entering buy trades here.
Instead, I’ll wait for the final push down and look for BUY signals on my TRFX indicator from the 4-hour to daily timeframes, with the strongest signal likely appearing on the daily.
If this setup plays out, I fully expect a move back up to test parity, with my first target being last month’s high at 0.958, where we could encounter some resistance. The second target will be the 2024 high at 0.992.
For this setup to be invalidated, we would need to see a clear weekly break and close below 0.925.
Let me know your thoughts below! :)
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