On Weekly the price has broken out of the downtrend channel and is testing the 108.00 resistance where a Double Top is present with the first top formed in April 2012 and is potentially forming the second top if the resistance level holds and the price will drop.
Another argument to have a short position is that there is also a pending correction to the downside if the 101.03-108.00 ascendent wave will start its drop at the Double Top.
Looking at the bigger picture, we might possibly see the drop from the Double Top form a second shoulder for a potential large Inverted Head and Shoulders if the price will get rejected at Fibo 38.2 of 101.03-108.00 or even as low as the 97.08 support.
Our trade setup consists of a sell position in anticipation of a drop from the current price area with a sell at 107.09, a stop loss placed above the 108.00 weekly resistance and Fibo 100.0 of 101.03-108.00 at 109.33 and a projected target at 103.37, near the Fibo 38.2 level.
On the Daily chart we have the price testing the 107.68 resistance while being located inside a uptrend channel and also testing the channel's resistance due to strong price momentum, while holding above both its MAs and above the daily pivot.
The 107.68-108.00 area is currently expected to behave as a Double Top and provide a good scenario for a short setup which is also strengthened by the Weekly short setup at the same level and a potential pending downside correction of the 100.04-107.72 ascendent wave.
The price has advanced to this area following a upside breakout of the neckline of the Daily Inverted Head and Shoulders
Our short/medium-term trade setup consists of a good risk/reward short position with a sell at the current level or at 107.07 with a stop loss at 108.24, strategically placed above the 107.68 and 108.00 levels and Fibo 100.0 of the 100.04-107.72 ascendent wave; the targets are 105.21 near the Fibo 61.8 level and a second target available at 103.42 near the Fibo 38.2 level and the 102.68 support.
On the H4 chart we have a ascending wedge and a pending correction to the downside for the 100.30-107.48 ascendent wave and the price has been rejected at the 107.44 confirming the Daily and Weekly Double Top and further downside is expected.
Our trade setup is to sell at 107.14 with a stop loss at 108.04 and first target at 105.66 with a second target at 103.45 near Fibo 38.2 of the 100.04-107.72 wave.
Weekly (Medium Term position)
SELL at 107.09
SL at 109.33
TP at 103.37
Daily (Short to Medium Term position)
SELL at 107.07
SL at 108.24
TP1 at 105.21
TP2 at 103.42
H4 (Short Term position)
SELL at 107.14
SL at 108.04
TP1 at 105.66
TP2 at 103.45
Goldenschild Asset Management