EUR/USD… And we are heading towards 1-hour 200-MA

Hourly chart

EURUSD H1 (07-20-2017 1740).png

A nice falling trend line has been established following the ECB’s dovish rant. The spot looks set to test 1-hr 200-MA – 1.1461. That would push the RSI into the oversold territory, so further losses are to be viewed with caution…

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EUR/USD breaches trend line support

Daily chart – rising trend line coming from Apr 17 low and May 11 low offered supp around 1.1497 has been breached. ECB still stands ready to boost asset purchases if required… now this is likely to disappoint the EUR bulls..

EURUSD D1 (07-20-2017 1718).png

EUR/USD could face resistance at 1.1562

Daily chart – Plot fib extensions on the rally from June 20 low. We get 76.4% extension at 1.1562. The RSI is almost overbought, but that isn’t a holy grail of sorts. Expect another wave of USD selling in NY open. 1.1616 looks scalable this week.

EURUSD D1 (07-18-2017 1632).png

But what does it mean for Draghi & Co. Fed tightening was boon of sorts for other central banks like the ECB. Now with the declining odds of Fed tightening, the EUR is on the rise. ECB is facing its own technical issues with respect to QE, its a done deal that the central will have to announce  taper this year due to technical factors.

If the EUR/USD would not have rallied so much, Draghi may have announced  taper this week. But EUR rally may force Draghi to remain non-committal this week…

EUR/USD Strategy: Short below today’s low

The spot is working hard at the trend line resistance on 1-hr chart, amid a bearish crossover between 50-MA & 100-MA. A potential head and shoulders pattern with neckline supp at 1.1368 is seen… On the daily, the spot trades below rising trend line… which now will offer resistance at 1.1444. Yday’s move confirmed bearish RSI divergence, plus daily macd is turning bearish. It’s good to sell the spot below the daily low of 1.1391. The move would add credence to rejection at falling trend line on 1-hr and push the spot lower to neckline supp of 1.1368.

Key Tech Levels – Spot 1.1418

1.1444 (trend line hurdle)

1.1456 (resistance on 1-hr)

1.1490 (July 12 high)


1.1397 (1-hr 200-MA)

1.1368 (neckline supp)

1.1312 (last week’s low)

1-hour chart

EURUSD H1 (07-14-2017 1734).png

11:00 GMT: EUR/USD Strategy: Stay short

Bearish price RSI divergence on the daily chart. Watch out for potential head and shoulders on 4-hour time frame. Sell on rise is the call as long as the descending trend line hurdle – 1.1438 on 1-hr chart remains intact. The pitchfork supp of 1.1336 could be targeted by bears. 4-hr RSI has turned bearish … that increases confidence in the bearish trade/view.

Key Tech levels – Spot CMP 1.1388

1.1393 (4-hr 50-MA)

1.1408 (trend line resistance)

1.1438 (Descending trend line hurdle on 1-hour)

1.1456 (resistance on 4-hr)


1.1380 (61.8% of 1.1312-1.1490)

1.1348 (23.6% of 1.1119-1.1490)

1.1336 (pitchfork supp)

1.1319 (5-DMA on weekly chart)

4-hour chart

EURUSD H4 (07-13-2017 1634).png

 

 

Technicals: Sell EUR/USD

A break above the Andrew’s Pitchfork mid line would require a great effort … fuelled by a sharp rise in the German yields. Moreover, it would have to be a near 90 degree rally, which as of now looks difficult. ECB’s Visco just came out in favor of ‘expansive’ mon pol. Weekly chart shows – failure to hold above the trend line resistance of 1.1464.

It makes sense to sell EUR/USD around 1.1450-1.1460 for a downside target of 1.1380 with stops above 1.1490

Daily chartEURUSD D1 (07-12-2017 1447).png