Bearish from July 2nd’s open below 1.3487
Our call for Q2 was bearish due, in part, to negative trend following programs (DMI) and these indications proved an excellent guide to direction as renewed selling pressure reversed Q1's entire gains. Although these losses were dominated by May's powerful decline, each month of the quarter has shown lower levels and not only are DMI studies increasingly bearish but momentum also has a negative bias. In view of this our call is Bearish below 1.3487. The immediate objective is 1.1876, the 2010 bottom, with a move below that point targeting 1.1641, the low from 2005, or even 1.1212, a 62% pullback of the 2000-08 rise.
The risk to this call is that selling pressure is ended. This would be confirmed by a move above 1.3487, this year's peak, with a new positive tone then focusing on 1.3877 or even towards 1.4248, the high from Q4 2011.