EUR/USD – Two Levels to Sell From

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EUR/USD - Two Levels to Sell From

Since falling to 1.0462 in March, EUR/USD has been consolidating. The resistance of this consolidation structure was in the 1.1040-1.1052 area.

EUR/USD 4H Chart 4/14
eurusd 4/14/2015
(click to enlarge)

After a third failed attempt to clear the consolidation resistance area, EUR/USD fell. The 4H chart shows the bearish breakout. Some see a break of an ascending triangle. Others see a broken double top. Here are some other observations from the 4H chart:
1) Price broke below the 200-, 100-, and 50-period simple moving averages, which reflects a return to the bearish trend, especially if price action tests the SMAs again as resistance.
2) The RSI dipped below 30, which reflects revival of bearish momentum. If it comes up but stays under 60, the bearish momentum would still be in play.

Other key notes:
1) The prevailing trend is bearish.
2) The ECB is dovish, and the FOMC is hawkish, even though it has become less so in 2015 due to disappointing data.

Given the aforementioned notes, EUR/USD should still be bearish. The first place we can look for resistance is the 1.0713 level – previous support pivot. But given the strong bullish candle, let’s give it some elbow space to the cluster of moving averages around 1.08. IF the RSI stalls around 60 as well, we should anticipate another bearish attempt at least down towards the 1.0462 low.

If price extends higher, the next key resistance will once again be the 1.1040-1.1050 area. However, since the current low missed the 1.0462 low, we should expect some “clear-out” above 1.1052.

EUR/USD Daily Chart 
eurusd04142015d
(click to enlarge)

In the daily chart, we can see that the prevailing downtrend remains bearish and there is no reason to believe that will change at the moment. If price breaks above 1.1060 and starts to hold above 1.10 then we should consider a more significant bullish correction mode.

Otherwise, look for sellers at 1.08 then again around 1.1060 just above the current consolidation high.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.