EUR/USD Ichimoku Kinko Hyo Analysis – Mar. 26, 2014

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EUR/USD Ichimoku Kinko Hyo Analysis - Mar. 26, 2014

On its 1-hour time frame, the Ichimoku Kinko Hyo indicator for EUR/USD is reflecting ranging market conditions. The pair is having trouble determining its direction in the near term, as traders try to price in the likelihood of negative deposit rates and its impact on EUR/USD.EUR/USD Ichimoku Kinko Hyo Analysis - Mar. 26, 2014

The pair has just broken below a rising trend line on the same time frame but is showing signs of a retracement. In the longer-term time frame, early downtrend signals can be seen from the Ichimoku Kinko Hyo lines but there hasn’t been much confirmation so far. Traders are still waiting for the release of the US durable goods orders data today to figure out how EUR/USD can trade.

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EUR/USD Technical Outlook

The red line of the Ichimoku Kinko Hyo set of indicators is moving sideways for now on the short-term time frame, indicating that price action could consolidate. Do take note though that the green line just crossed down from the price yesterday, which is a sell signal.

Be careful since price is still trading above the blue line, which means that the pair might be in for more gains. A price cross below this line could confirm that a selloff is in the cards.

Meanwhile, the price has spiked around the support and resistance levels marked by the orange lines, which suggests that volatility is higher than usual. Those looking to short the pair on a breakdown could set stops above the resistance levels, which are at 1.3820 and 1.3885 for now. However, a selloff might be short-lived as the 1.3770 near term support is holding up very well.

New lows could be established if the selling pressure is strong and is supported by strong US economic figures. From there, EUR/USD could test the next visible support region around the 1.35600 major psychological level. On the other hand, a resumption of the rallies could take the pair close to 1.4000 again.

To contact the reporter of the story: Marco Roemer at marco@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.