EURUSD Technical Analysis | Forexlive
On the daily chart below, we can
see that we have a strong downtrend in the EURUSD pair. The possible major double
top at the
1.1033 high has the neckline at the 1.0533 level, which is at the moment the
target for the sellers. The price is now stalling at a key support level at the 1.07 handle though
and we may get a bounce first before another selloff later on.
The moving
averages are clearly pointing downwards, and we can see that on the daily chart the
sellers always leant on the blue 8 period moving average, which generally
happens in strong trends only. Another thing to be aware of is that the two
tops diverged with the MACD which makes the double top
pattern more reliable.
On the 4 hour chart below, we can
see that EURUSD has been trading within a falling channel with clean lower lows
and lower highs. The 1.07 handle support is also the bottom of the previous
divergent rising channel. Recall, we highlighted this support as a target for
the sellers because that’s generally the target on channels’ breaks and in fact
we got a selloff right into this level.
What we can notice now though is
that EURUSD has been diverging with the MACD falling into the 1.07 support,
which is a signal of a weakening momentum often followed by pullbacks or
reversals.
In this case, if we get a
pullback, the target for the buyers should be the 1.08 handle with the 1.0845
resistance being the last line of defence for the sellers as that’s the spot
where we will have the 38.2% Fibonacci
retracement level and the daily red 21 period moving average
for confluence. Should be a tough nut to crack
if the bearish bias remains intact.
On the 1 hour chart below, we can
see that we have a descending triangle pattern formed right at the support
level. Generally, when the price breaks on either side of the triangle what
follows is a strong move into the breakout direction. If we get a breakout to
the downside, the sellers should extend the fall into the 1.0670 price zone
first and target the lower bound of the channel next.
If we get a breakout to the
upside, then we should see a bigger pullback in EURUSD with the 1.08 handle
being the target for the buyers. Given that fundamentally the market has
already basically priced in the hike in June and July, it may be better to wait
for more data to confirm the next move and not getting caught in fakeouts. The US NFP report is the highlight of this
week.