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Technical analysis for EURUSD: 3rd October -7th October

The Euro is trading higher against it all major rival after the dovish statement of interest rate hike decision in the last FOMC meeting minute. The daily uptrend in the EURUSD pair still intact and the price is making nice recovery after hitting the critical support level at 1.09086.Professional price action traders are overly cautious  in trading this pair since the long term bearish trend in the EURSUD pair is at risk. In the upcoming week are expecting less volatility in the EURUSD pair since there is few major economic news release on behalf of EURO. However, we can see extremely volatility in the market on Friday due to the Non-farm Employment change data release. The previous Non-farm Employment data was 151 k which is pretty bad. Based on previous data and the overall performance of the EURUSD pair we are not expecting any significant improvement in favor of the Green Bucks So fundamentally the dollar remains broadly weaker against the EURO in this upcoming week. But despite the dovish statement of the FED the dollar might gain a little strength in the market in the event of ISM Manufacturing PMI data. The data was significantly bad in the last couple of release but economic researchers are expecting green data which will help the dollar to recover its losses to a certain extent.

Daily chart analysis

daily chart

Figure: Technical parameter in the EURUSD pair

The medium-term uptrend in the EURUSD pair is still intact and the price is trading well above the 38.2% Fibonacci retracement level. The Fibonacci retracement level has been drawn from the low of 4th December 2015 to the high of 3rd may 2016.After hitting the critical resistance at 1.16070 the EURUSD pair falls sharply and manage to find some support near the 61.8% retracement level. The 1.09142 level provided strong support to the EURUSD pair and eventually the pair managed to hit the minor resistance level at 1.13649 level. In the last week, the EURSD pair closed well above the 38.2 % retracement level. The 38.2% retracement level is situated at 1.12000 level and traders are expecting some bullish push from this level. But the intraday traders are overly cautious and not willing to buy this pair at the current level since the newly formed bearish trend line resistance level is just at 1.12750 level. Trading the pair at the current price level will be an immature act since the price is trading to close to the important support and trend line resistance level.TO be precise the pair has ceased its move and waiting for a clear breakout in the market. In the daily chart, the pair has formed an ascending channel like structure which is definitely a bullish scenario for the EURUSD pair. The market sentiment remains bullish based on technical analysis and dovish statement of the FED in the last FOMC meeting minute. Professional traders are waiting patiently for the clear breakout of the bearish trend line resistance level situated at 1.1200 level. A daily closing above that level will bring strong rally in the upward direction and most likely to challenge the major resistance level at 1.1620 level. On the contrary, if the pair manages to breach the 1.0950 level then we can see a strong move in the southward direction. The first target of the pair would be the low of 4th December 2015.A clear decisive break of the level will confirm the resumption of a bearish trend in the EURSD pair.

Weekly chart analysis for the EURUSD pair

weekly chart

Figure: Weekly chart analysis for the EURUSD pair

The EURUSD pair is in critical condition in the weekly chart. Currently, the price is testing the 100 day SMA in the weekly chart. Professional price action traders are expecting a strong bearish move from this level towards the 1.09820 level. But considering the fundamental conditions the US economy is still pretty weak and yet they don’t have the enough strength to drive the price downward from this level. A clear break of the 1.1240 level will bring strong bullish momentum in the market targeting the next critical resistance level situated at 1.16267 level. A valid break of that level will confirm the initial bottom formation of the EURUSD pair towards the 1.04894 level. If the resistance level at 1.16267 level fails to restrict the upward momentum of this pair then we can see a retest of the 200 days SMA in the weekly chart which is situated at 1.22894 level. On the contrary, if the pair manages to trade below the 1.12405 level then we can expect a strong bearish move in the pair towards the 1.09280 level. Decent bounce in the EURUSD pair from that level is expected but the bullish momentum is most likely to fade out if the 100 day SMA strongly holds on the weekly chart.

Summary: Currently the EURUSD pair is trading at a very critical level. In the daily chart, the pair is getting ready to break the ascending triangle with initial upward targets of 1.1620 level. But if there is a bearish breakout in the chart pattern then we will see a drop of more than 400 pips from the current price level. (1.1240).Price is also testing the 100 day SMA in the weekly chart with strong bullish momentum. Traders are expecting a break out the 100 days SMA in bullish direction since this is the 6th consecutive times EURO is attempting to break the dynamic resistance. Considering all the fundamental and technical parameters the overall bias for the EURUSD pair remains slightly bullish. A clear break of the ascending triangle resistance level will confirm the bullish scenario of this pair.

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