The impulsive move downwards finally unfolds as expected. The bearish flag and the rejections at the 80.65 resistance that we noted in the previous posts finally paid off our patience. The index fell to new lows as its major component EURUSD has made new short-term highs. The index is heading towards 79.50 and clearly the trend remains downward.
The short-term resistance is now found at 80.31 and at 80.70. Support is found at 79.75 and 79.50. We remain bearish as this leg down is starting and we believe it can reach in the longer term the 79-78 level.
The picture is clearer in the daily chart. The downtrend never ended just paused and as expected by the bearish flag formation prices start falling in an impulsive pattern to new lows. Investors should not have open long positions as all stops were hit for bulls and the trend remains downward with no signs of a trend reversal. We remain short with 80.31 as our first stop.
The material has been provided by InstaForex Company - www.instaforex.com
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