Forex Trading Technical Analysis – EURUSD on an uptrend with a shorter term unclear

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The Dollar has been at its lowest levels of over 3 years during the last two weeks. Therefore several major currencies have been following uptrends against the USD. Europe’s single currency which is currently on a 16 month high versus the US Dollar ,according to major technical indicators, appears to still be following an uptrend. Both in hourly as well as in daily time periods the major technical indicators following the trend such as price directions, regression channels, and moving averages are indicating an uptrend. Therefore the upwards movement which is exhibited over the last hours can be regarded as a smaller part of the daily move which will end up higher.

In regards to the EURUSD wave correctional behavior it is difficult to state conclusions without doubt. Though most of the daily time frame indicators are pointing up, uncertainty exists in regards to the hourly period as analysis has shown no clear wave . The major indicators that search for waves or correctional behavior contradicted themselves in the hourly periodicity as they have been pointing at different directions and hence no conclusion can be made safely.

Investors seeking to chase the Euro’s upward move and establish overnight long positions need to be a bit cautious and skeptic in regards to the amount the wish to invest as it appears that the EURUSD pair is slightly overbought. It’s possible that over the time of the Euro’s rise even more players have anticipated the continuation of this upward move and hence have left their positions open for a while. Therefore it won’t be a wonder for these players to realise it’s time to lock their profits and hence the Euro dropping in value. The same however cannot be said for players aiming to make gains faster chasing this trend in an hourly time frame as the market appears to have established a neutral position over this, as players focus on a longer time frame.

As part of a daily/hourly basis the Euro could find support at the following three levels.

1. A first support is located at around 1.4790, an area where several previous peaks and troughs from the hourly time frame appear to meet, the exponential moving average of 10 4-hour periods as well as the 1hour 23.6% Fibonacci correctional move. It appears that this level was severely tested over the last days and therefore appears to be quite strong

2. A weaker support is located at around 1.4735 where the 1hour 38.2 Fibonacci as well as the 10 4hour periods moving average coincide.

3. A third support which is deemed to be quite strong is located much lower at 1.4640 where several peaks and troughs appear to be clustering, both in an hourly as well as in a daily time frame. To make it even stronger the 1hour 61.8% Fibonacci correctional move and the 10 days moving average reside there.

To locate possible resistance levels cannot be stated with certainty given the Euro is on a 16 month high and exhibits every now and then correctional behavior before going higher. Possible resistances can be regarded the 1.4855 level which is the 76.4% 1 hour Fibonacci correction from yesterday’s 1.4877 high as well as this high itself. Furthermore as the Euro’s next target before skyrocketing is the 1.4904 peak from December 2009 it could be considered as a slightly higher one. It is relatively soon for higher levels to be estimated as there are aren’t many reference points to consider.

Overall indicators are all in favor of the Euro going up but there is some uncertainty over what its behavior will be on the shorter term and especially since a lot of players already hold long daily positions from whom they could decide to lock their profits at any moment . A a possible entry point for long positions could be either of the 3 resistance points described above , as once broken a rapid up move could be generated.

Time Period Daily Hourly
Trend
Wave
Extreme 

Positions

Slightly 

Overbought

Neutral

 

Possible Supports Possible Resistances
Level 1 1.4790 Level 1 1.4855
Level 2 1.4735 Level 2 1.4877
Level 3 1.4640 Level 3 1.4904