Daily Market Analysis By FXOpen

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Weak US Dollar Ahead of Critical Inflation Data


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The US dollar reacted strongly to the June NFP report released last Friday and declined across the board. The US economy added fewer than expected jobs in May, but the unemployment rate declined to 5.8%.

The reaction in the dollar may have come as a result of traders and other market participants preparing for the inflation data later this week. On Thursday, right when the European Central Bank is presenting its June decision, the Consumer Price Index (CPI) from the United States is released.

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Rising Inflation – Bullish or Bearish for the US Dollar

One month ago, the US dollar declined on the CPI release. The April headline and core inflation data showed rising prices, and the dollar took a dive.

However, dollar bears should keep in mind two things. First, it is not the first time in history when higher inflation may lead to a stronger, not a weaker, dollar. A close look at what happened in the 1970s, a period known as one with higher inflation, will show that the dollar may get stronger on rising prices.

Second, the core inflation difference between Europe and the United States suggests we may see a stronger dollar in the second half of the year. The core inflation difference leads five months, and so far it correlated perfectly with the EUR/USD exchange rate. More precisely, it points to a much lower EUR/USD than the current levels, something that dollar bears may want to consider.

This week, the ECB monetary policy decision will trigger volatility on the euro pairs, but the market participants will also look at the tapering message. Next week it is the Fed’s turn to talk about tapering, and the difference between the two statements will be the driver for the EUR/USD exchange rate.




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BTC and XRP – Breakout seen with further downside expected


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BTC/USD

The price of Bitcoin has been on a decline since yesterday and from its high at $36,742 made a decrease of 11.67% measured to its lowest point today at $32,455. Currently, it is sitting at $32,850 as a minor recovery was made but the picture still looks breaking with more downside expected.

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Looking at the hourly chart, you can see that the price has made a continuation of the descending move from the 3rd of June. A breakout was made from the ascending support on the 5th after which a test of prior support for resistance. As resistance was present the price continued moving further to the downside and breaking out from the horizontal levels. This is most likely the development of the 3rd wave out of the higher degree five-wave impulse that started on the 3rd of June.

If this is true then the price of Bitcoin is now headed to the vicinity of the $30,000 area where the next support level is. Recovery of the 4th wave could be seen but the projection takes back Bitcoin even further to the downside at around $27,500 area for the completion of the impulsive move.



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EUR/USD Eyes Upside Break, USD/JPY Faces Uphill Task


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EUR/USD is showing positive signs above the 1.2150 pivot level. USD/JPY could extend its decline unless it clears the 109.60 resistance zone in the near term.

Important Takeaways for EUR/USD and USD/JPY


  • The Euro started a fresh increase from the 1.2100 support zone.
  • There is a key bearish trend line forming with resistance near 1.2185 on the hourly chart of EUR/USD.
  • USD/JPY declined below the 109.90 and 109.60 support levels.
  • There was a break below a major bullish trend line with support near 109.75 on the hourly chart.

EUR/USD Technical Analysis

Recently, the Euro saw a downside correction from well above the 1.2200 level against the US Dollar. The EUR/USD pair broke the 1.2150 support level and extended its decline.

However, the bulls were active above the 1.2100 level. A low was formed near 1.2103 on FXOpen and the pair is now rising. There was a break above the 1.2120 and 1.2150 resistance levels.

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The pair even climbed above the 50% Fib retracement level of the recent decline from the 1.2249 high to 1.2103 low. It is now trading above the 1.2165 level and the 50 hourly simple moving average. The pair is now attempting an upside break above 1.2185 and 1.2190.

There is also a key bearish trend line forming with resistance near 1.2185 on the hourly chart of EUR/USD. The next key resistance is near the 1.2215 level.

The 76.4% Fib retracement level of the recent decline from the 1.2249 high to 1.2103 low is also near the 1.2215 level. A clear upside break above the trend line and then 1.2215 could open the doors for a larger increase. In the stated case, the pair could rise towards the 1.2250 level.

An intermediate support is near the 1.2175 level and the 50 hourly simple moving average. The next major support is near the 1.2150 level, below which the pair could drop towards the 1.2100 support.




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LTC and EOS – Correction could have ended but further confirmation is needed


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LTC/USD

The price of Litecoin has been on the rise since Tuesday when it fell down to $144.36. From there we have seen an increase of 21.5% measured to its highest point today at $175. A minor pullback was made but again a rise with the price currently sitting slightly lower than its highest point today.

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On the hourly chart, you can see that the price of Litecoin is still in a descending triangle from the 26th of May. Another interaction with its resistance level could be expected during the day as the 5th wave from the starting five-wave impulse from Tuesday. This could be the start of the higher degree upward move after the three-wave correction ended on the 8th in which case after a retracement we are to see a breakout from the upside.

The picture still looks corrective which is why we could be seeing the 4th wave out of the five-wave correction move from the 26th in which case the price of Litecoin could fall back to a lower low compared to the one on the 8th of June. This is why we are going to see from the interaction with the descending resistance if the price gets rejected and the depth of the expected retracement which scenario would be in play.

If it lands on the 0.5 Fib level or slightly lower and finds support there on the expected retracement that could be an early sign for a potential breakout to the upside.




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Gold Price and Oil Price Eye Additional Gains


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Gold price is showing positive signs above the $1,880 resistance zone. Crude oil price is holding a major support, but it is facing resistance near $70.00.

Important Takeaways for Gold and Oil


  • Gold price gained pace above the $1,875 and $1,880 resistance levels against the US Dollar.
  • There was a break above a key bearish trend line with resistance near $1,894 on the hourly chart of gold.
  • Crude oil price climbed higher and it even cleared the $70.00 resistance zone.
  • There is a crucial bullish trend line forming with support near $69.00 on the hourly chart of XTI/USD.

Gold Price Technical Analysis

This week, gold price remained in a positive zone above the $1,865 level against the US Dollar. The bulls were able to push the price above the $1,880 resistance zone.

The price even settled above the $1,885 level and the 50 hourly simple moving average. There was a break above a key bearish trend line with resistance near $1,894 on the hourly chart of gold.

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A high is formed near $1,900 on FXOpen and the price is now consolidating gains. An initial support on the downside is near the $1,893 level. It is close to the 23.6% Fib retracement level of the recent increase from the $1,870 swing low to $1,900 high.

The first major support is near the $1,890 level and the 50 hourly simple moving average. The next key support is near the $1,885 level.

The 50% Fib retracement level of the recent increase from the $1,870 swing low to $1,900 high is also near the $1,885 level. Any more losses could open the doors for a move towards the $1,870 low.

An initial resistance is near the $1,905 level. The first major resistance is near the $1,910 level. A clear break above the $1,910 level may possibly open the doors for a move towards the $1,925 level. The next major resistance sits near $1,935.


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GBP/USD and GBP/JPY: British Pound Eyes Fresh Increase


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GBP/USD is trading nicely above the main 1.4080 support zone. GBP/JPY is recovering and it could rally if there is a clear break above the 155.00 resistance zone.

Important Takeaways for GBP/USD and GBP/JPY



  • The British Pound is trading in a range above the 1.4080 support against the US Dollar.
  • There is a key bullish trend line forming with support near 1.4100 on the hourly chart of GBP/USD.
  • GBP/JPY is showing a few positive signs above the 154.50 support zone.
  • There is a major bearish trend line forming with resistance near 155.00 on the hourly chart.

GBP/USD Technical Analysis

In the past few sessions, the British Pound mostly traded in a range below the 1.4200 resistance zone against the US Dollar. The GBP/USD pair declined recently after it failed to settle above 1.4180.

There was break below the 1.4150 support level and the 50 hourly simple moving average. The pair even traded below 1.4100, but it remained well bid above the 1.4080 level. A low is formed near 1.4086 on FXOpen and the pair is currently consolidating.

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There was a break above the 1.4100 level. The pair recovered above the 23.6% Fib retracement level of the recent decline from the 1.4184 high to 1.4086 low.

On the upside, an initial resistance on the is near the 1.4135 level. It is close to the 50% Fib retracement level of the recent decline from the 1.4184 high to 1.4086 low. The next key resistance is near the 1.4150 level, above which the pair could rise towards the main 1.4200 resistance.

On the downside, there is a key bullish trend line forming with support near 1.4100 on the hourly chart of GBP/USD. If there is a break below the trend line support, the pair could test the 1.4080 support. If there are additional losses, the pair could decline towards the 1.4000 level.




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Core US Inflation – The Highest Two-Months Increase in Three Decades
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The US inflation data for the month of May was released last week. The data came out at the same time as the European Central Bank started its monetary policy meeting last Thursday.

Because the two events were the main events of the trading week, the markets did not move in the prior days. In fact, the ranges on most of the FX pairs were so tight that one may have argued that summer trading conditions are already here.

When the Consumer Price Index (CPI) was released, it showed that the prices of goods and services in May were increasing much faster than expected. As always, the CPI comes in two versions – the headline report and the core report. The latter is the one that matters for the Fed because it is not considering the food and energy prices – too volatile to be included in the report.

The headline CPI data for the month of May was expected to increase by 0.4% – it came out at 0.6% on a month-over-month basis. Also, the core data was expected at 0.5% – it came out at 0.7%.

With both headline and the core CPI beating expectations by a mile, coupled with the inflation data for the previous months, we see the highest two-month increase in inflation in three decades.

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What About the Fed?

The Federal Reserve of the United States (Fed) has a dual mandate. To create jobs and to maintain price stability.

Naturally, inflation refers to the price stability part of the Fed’s mandate, and this one changed during the pandemic. More precisely, the Fed shifted its inflation mandate last August, from targeting 2% to averaging 2%. Out of the two releases, the Fed focuses on the core CPI.

Yet, the Fed did not mention so far what is period it considers when averaging inflation. The longer the period, the more it will allow inflation to rise.

At the start of the 1970s, as inflation escalated, then US President Nixon abandoned the Bretton Woods system, shocking financial markets and the international community. At the end of that decade, the Fed’s Chair, Paul Volcker, introduced bold anti-inflationary measures because inflation exceeded 13% on an annualized basis.

Last week’s data means that the core CPI reached 3.8% in the United States on an annualized basis. Central banks like the Fed argue that this is transitory and that the prices will cool down eventually.

While there is a long way to 13%, no one is expecting the Fed to raise the rates as Volker did back in 1979. Instead, all the Fed should do is to signal the tapering of its asset purchases. That might do the trick to stop the upside pressures on the prices of goods and services, and the Fed has the chance to do so this week, at its Wednesday meeting.

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BTC and XRP – Recovery could end soon
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BTC/USD

The price of Bitcoin has been on the rise since the 8th of June when it fell to the $31,000 zone again. From there we have seen an increase of 31% measured to its highest point yesterday at $40,750. Now it is being traded slightly lower but is still in an upward trajectory overall.

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You can see that the price fell for the third time to the $31,000 zone on the 8th of June on the hourly chart. This was done in a three-wave manner from the May 26th high but also from its June 3rd high. This creates a problem in counting waves as there isn’t still a clear sign that the price bottomed out. However for now we can assume that the price found support again on the 8th after which we have seen an impulsive rise. This could be an indication that we have seen the start of a new wave to the upside which is set to recover the price more significantly.

If this is true then the price should now develop a five-wave pattern which is why a higher high from here could be expected to the vicinity of the horizontal range of $42,000. After that the 2nd wave of the higher degree count should retrace the price before a breakout above the zone.

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EUR/USD and EUR/JPY: Euro Eyes Fresh Increase

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EUR/USD struggled to clear 1.2200 and recently corrected lower. EUR/JPY is trading in a positive zone, but it must clear 133.70 for more upsides.

Important Takeaways for EUR/USD and EUR/JPY


  • The Euro declined below the 1.2150 and 1.2120 support levels, and tested 1.2100.
  • There is a key bearish trend line forming with resistance near 1.2142 on the hourly chart.
  • EUR/JPY gained pace after it broke the 132.80 and 133.00 resistance levels.
  • There was a break above a major bearish trend line with resistance near 132.90 on the hourly chart.

EUR/USD Technical Analysis

The Euro started a fresh decline from the 1.2200 resistance zone against the US Dollar. The EUR/USD pair broke the 1.2150 and 1.2120 support levels to move into a short-term bearish zone.

The pair even settled well below 1.2150 and the 50 hourly simple moving average. A low was formed near 1.2092 on FXOpen and the pair is now correcting losses. There was a break above the 1.2120 resistance level and the 50 hourly SMA.

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There was also a break above the 23.6% Fib retracement level of the recent drop from the 1.2192 high to 1.2092 low. The pair is now facing a strong resistance near the 1.2140 and 1.2150 levels.

There is also a key bearish trend line forming with resistance near 1.2142 on the hourly chart. The trend line is close to the 50% Fib retracement level of the recent drop from the 1.2192 high to 1.2092 low. A proper break above the trend line resistance could pop the pair higher towards the 1.2200 resistance zone.

The next major resistance is near the 1.2220 level. Any more gains could set the pace for a fresh high above the 1.2150 level in the near term. On the downside, an immediate support is near the 1.2100 level.

If there is a downside break, EUR/USD might continue to move down towards the 1.2060 support. Any more losses could open the doors for a test of the 1.2020 support region.

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LTC and EOS – Was the correction over?


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LTC/USD

The price of Litecoin has been in recovery from the 8th of June when it fell to around $146 at its lowest point. From there the price went on to form a higher low and higher high to $180 area, breaking out from the symmetrical triangle in which it was since the 27th of May. Today we have seen a pullback as a retest of the prior resistance for support, and as support was present we have seen a bounce from there. Currently, the price is being traded at $172.5 area and is still moving in an upward trajectory.

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Looking at the hourly chart you can see that the price of Litecoin most likely ended its corrective stage on the 8th of June. This could have been an ABC correction from the 27th of May when the first impulsive move was seen. If so, then from the 8th we have seen the start of another impulse wave to the upside. Another possibility in a positive scenario could be that the price made a five-wave correction count ABCDE to the 12th of June from where the next impulse started. In that case the price has made a three-wave increase with the today seen pullback being its 4th wave out of the five-wave impulse.

Now in both of these positive scenarios, the price would be expected to go higher to the upside in an impulsive manner and make a higher high compared to the one on the 27th of May when the price reached $208.89.

However, there is a negative scenario still in play. If the price ended its three-wave ABC correction on the 8th of June the next structure could end as a three-wave correction to the upside before another downfall. In that case, the price could continue its downward trajectory in the short-term and fall back below the triangle’s resistance level and also the starting point of the prior increase at about $154.3.






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Gold Price Slides Below Key Support, Oil Price Trims Gains

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Gold price started a major decline below the $1,850 and $1,820 support levels. Crude oil price is also trimming gains and it traded below $70.50.

Important Takeaways for Gold and Oil

  • Gold price started a fresh decline from well above the $1,850 level against the US Dollar.
  • There is a connecting bearish trend line forming with resistance near $1,825 on the hourly chart of gold.
  • Crude oil price climbed higher towards $72.75 before correcting lower.
  • There was a break below a major bullish trend line with support near $71.20 on the hourly chart of XTI/USD.

Gold Price Technical Analysis

This week, gold price faced an increase in selling pressure near $1,900 against the US Dollar. The price started a major decline and it traded below many important supports near $1,880 and $1,850.

The price even settled below the $1,850 level and the 50 hourly simple moving average. There was a break below the $1,820 support and $1,800. A low is formed near $1,762 on FXOpen and the price is now correcting losses.

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An immediate resistance on the upside is near the $1,790 level. It is near the 23.6% Fib retracement level of the recent decline from the $1,862 swing high to $1,762 low.

The first major resistance is near the $1,800 level. There is also a connecting bearish trend line forming with resistance near $1,825 on the hourly chart of gold. An intermediate resistance is near the $1,815 level and the 50 hourly SMA.

The 50% Fib retracement level of the recent decline from the $1,862 swing high to $1,762 low is also near the $1,815 level. Conversely, the price might resume its decline below $1,780. An initial support is near the $1,775 level.

The first major support is near the $1,765 level. The next key support is near the $1,750 level, below which the price might continue to move down towards the $1,720 level in the near term.

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GBP/USD Nosedives, USD/CAD Starts Major Increase

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GBP/USD started a sharp downward move after it failed to clear 1.4200. USD/CAD is surging and it recently cleared the 1.2440 resistance zone.

Important Takeaways for GBP/USD and USD/CAD



  • The British Pound started a fresh decline from well above the 1.4100 level.
  • There is a key bearish trend line forming with resistance near 1.3850 on the hourly chart of GBP/USD.
  • USD/CAD gained bullish momentum above the 1.2350 and 1.2400 resistance levels.
  • There is a major bullish trend line forming with support near 1.2410 on the hourly chart.

GBP/USD Technical Analysis

The British Pound made a couple of attempts to settle above 1.4150 and clear 1.4200 against the US Dollar. However, the GBP/USD pair failed to continue higher, and it started a fresh decline from well above the 1.4100 level.

The pair gained bearish momentum below the key 1.4000 support zone. There was a clear break below the 1.3920 support level and the 50 hourly simple moving average. The pair even broke the 1.3840 support and traded as low as 1.3790 on FXOpen.

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The pair is now consolidating losses above the 1.3800 level. An initial resistance on the upside is near the 1.3840 level. There is also a key bearish trend line forming with resistance near 1.3850 on the hourly chart of GBP/USD.

The next hurdle is near the 23.6% Fib retracement level of the downward move from the 1.4132 swing high to 1.3790 low. The main hurdle is near the 1.3900 level and the 50 hourly simple moving average.

Any more gains could lead the pair towards the 50% Fib retracement level of the downward move from the 1.4132 swing high to 1.3790 low. An initial support on the downside is near the 1.3800 level. The first major support is near the 1.3780 level.

Any more losses could open the doors for a move towards the 1.3720 support zone. The next major support sits near the 1.3650 level.




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BTC and XRP – Recovery shortly expected


BTC/USD


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The price of Bitcoin has been on a decline since the 15th of June when it was trading at $41,151 at its highest point. From there we have seen a decrease of 24.5% measured to its lowest point today at around $31,240. Now the price is slightly higher but is currently testing the horizontal support level from the 23rd of May.

On the 4-hour chart, we can see that this is the third time the price has been trading on its lower level of the horizontal range that formed from the 23rd of May. But doing so it weakened the level which is why it potentially won’t hold for much longer. However, the wave structure implies that we might see a recovery shortly at least as the 2nd sub-wave of the next three-wave correction to the downside after which we could see a larger recovery.

From here a breakout to the downside isn’t so likely but rather the price could now find another support here and bounce but only for a lower high compared to the one on the 15th of June. Another possibility would be that from the 8th till the 15th of June we have seen the 3rd wave out of the higher degree correction with its first wave being the upward move from the 23rd till the 26th of May. In that case, the price could continue its downside trajectory but also in the near term a move to the upside would now be expected.




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EUR/USD Eyes Recovery, USD/CHF Remains Elevated


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EUR/USD declined heavily below 1.2000 and it tested 1.1850. USD/CHF is rising and it could rally further if it clears the 0.9200 and 0.9220 resistance levels.

Important Takeaways for EUR/USD and USD/CHF



  • The Euro started a fresh decline from well above the 1.2000 zone against the US Dollar.
  • There was a break above a connecting bearish trend line with resistance near 1.1900 on the hourly chart of EUR/USD.
  • USD/CHF gained bullish momentum above the 0.9050 and 0.9120 resistance levels.
  • There is a key bearish trend line forming with resistance near 0.9200 on the hourly chart.

EUR/USD Technical Analysis

The Euro struggled to gain pace above the 1.2150 level and it started a major decline against the US Dollar. As a result, the EUR/USD pair broke the main 1.2000 support zone to move into a bearish zone.

The pair even declined below the 1.1920 support zone and settled below the 50 hourly simple moving average. A low was formed near 1.1846 on FXOpen and the pair is now correcting losses. It corrected above the 1.1880 and 1.1900 resistance levels.

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There was a break below the 23.6% Fib retracement level of the recent decline from the 1.2147 high to 1.1846 low. There was also a break above a connecting bearish trend line with resistance near 1.1900 on the hourly chart of EUR/USD.

It is now trading nicely above the 1.1900 support zone and the 50 hourly SMA. On the upside, the pair is facing hurdles near the 1.1940 and 1.1950 levels. A clear upside break above 1.1950 could set the pace for a larger recovery.

The next major resistance is near the 1.2000 zone. On the downside, there is a major support forming near the 1.1900 zone. The next key support is near the 1.1880 level. A downside break below the 1.1880 support could restart decline. The next major support could be near the 1.1820 level.




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LTC and EOS – The start of a another recovery seen most likely


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LTC/USD

The price of Litecoin has been on the rise since Tuesday when it came down to $104.9 at its lowest point. From there we have seen an increase of 27% as it reached $133.3 at its highest point today. Currently, it is trading slightly lower but is still in an upward trajectory.

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On the hourly chart, we can see that the price fell into a lower low compared to the May 23rd one and spiked to the upside, reaching the broken downtrend support which is being now tested for resistance. If the price finds resistance here another move to the downside would be expected, but only as a pullback before further upside continuation. This is so because on the 22nd we have most likely seen the end of the corrective five-wave move from the 27th of May so now a move to the upside like it developed from the 23rd till the 27th would be expected.

The price could now increase as much as 35% but it would be expected to go lower than on the 27th when it came up to $209. This is because the price made a lower low which is why a lower high would be more likely. Another possibility could be that we have seen the start of a completely new impulse wave to the upside and that the 22nd of June’s low was the completion of the higher degree down move. But this is going to be validated from the type of descending move we see after this expected rise.




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