USDPLN has seen attempts of breaking out from monthly highs hitting a plateau as bears take hold. Prices are currently finding resistance at the 23.6% of the 4.2432/3.6557 downside Fibonacci leg. In addition, the lower border of the Ichimoku cloud is highlighted as a confluence level of the said leg.
The bias remains to the downside as momentum wanes, with the next target being August’s lows. A recent bearish divergence has pulled prices down through the 38.2% from monthly highs.
Should another attempt to move towards cloud engulfment fail, then further downside is expected. As momentum increases, we will wait to see if further divergences become apparent.
A short-term outlook shows the currency pair in a descending channel from the beginning of November. Prices are now clinging to the top border of the channel in an attempt for bulls to pounce on the direction.
A hidden and standard divergence could lead to a trend reversal, moving prices to monthly highs. However, with the Ichimoku cloud forming a resistance, then the recent rally to the upside could reverse and bring prices back down to the mean.
Should this occur, then we could see the descending channel continue, moving the trend lower to the mid-$3 range.