EUR crosses/EUR/USD/Technical Analysis

EUR/USD: Short-term bearish bias but still in overall range-trading mode

    I’m still in overall range-trading mode on EUR/USD but the events of last night have given some of the crosses (EUR/GBP, EUR/AUD techs coming later) a short-term bearish feel. I’m sure that bulls will be very confident about buying near the 61.8% retracement and channel bottom which comes in near 1.2755. In the short-term, with the crosses feeling heavy, I’d expect yesterday’s rebound high in London at 1.2960 to provide solid resistance. Therefore, range-trading 1.2750/1.2960 with a short-term bearish bias but a medium term bullish bias is how I read the situation.

  1. Maybe you are quite right Sean. But please, tell me, Don´t you think november election in the US and the paralysis about the fiscal cliff plus complete inertia in the EU could transform this range in a bearush trend? Which could be the signal? A dip below 1,2750 ? Or the imposibility to reach again 1,296?

  2. Good morning Sean and anyone who reads my posts 😉

    Regarding EURUSD, here are my recommendations:

    – Buy small at 1.2815

    – Buy medium at the trend line support from the bottoms at 1.20, currently around 1.278.

    – Buy big at the fibonacci retracement of 1.2735 IF the move down occurs during the same day the trend line support is temporarily broken. A daily close below this fibonacci level and the trend line resistance, (if this happens) would be extremely bearish.

    – For the risky players, one might consider shorting on a rebound to 1.2885-1.2890 with the entry points above as exit points.
    Yesterday saw a risk-off impulsion based on euro crisis concerns and earnings weakness.

    Currently the market is making a pause before attempting to hit new lows. By looking at a daily chart, we can see clearly that the EURUSD is going to soon test some key levels. If we fail to rebound on the trend line support from the bottom of this year around 1.20 in the coming days, then the bullish impulsion on EURUSD will be under scrutiny because it could very well be that we are looking to break the weekly pattern that has been built for the last three years (oscillation between 1.5 and 1.2) and go below parity(! aka the final stage of the euro disease). For the moment we maintain our bullish view, and consider the area of 1.27x as a strong buy opportunity. It is possible that the horizontal support at 1.2815 is strong enough to hold any further move to downside, and that a rebound to the upside would occur once the trend line support reaches the 1.2815. Notice that the 200 DMA is still in this area as well.

    For the moment, it is wait and load your guns with your bullets.

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