Technical analysis for EURUSD: 7th November – 11th November
The EURUSD pair has corrected to a great extent over the last week after the breakout of the triangle chart pattern. The pair sharply fell after breaching the triangle support zone at 1.10898 level and eventually started its correction in the last week after the hitting critical support level at 1.08526.Investors are overly cautious about the next move of the pair since the presidential election is on 8th November. Though there are very few significant major economic news releases but conservative investors will be staying on the sideline unless the market gives extremely clear and reliable trading signal. The ongoing issue of interest rate hike decision by the FED has also added some sort of uncertainty about the current strength of the U.S dollar. Though there is 67.3% of interest rate hike in the month of December but traders were not given any clear clue by the FED in the last FOMC meeting minutes. Though the U.S dollar has shown some significant amount of strength in last few weeks but the recent strong correction of the EURUSD pair has created a little bit of confusion into the mind of sellers. But the pair needs to overcome significant resistance level before the buyers fully establish their power in the market daily closing above the critical resistance level at 1.11809 level is required in order to see some fresh buying pressure in the market. The market will remain strongly bearish until the critical resistance level at 1.11809 is breached on a daily closing.
Daily chart analysis
Figure: Technical parameter in the EURUSD pair
There has been a strong bullish correction in the EURUSD pair in the last week and traders are overly cautious about the next move of the EURUSD pair. In the daily chart, there has been a golden bearish crossover of the 100 and 200 days SMA which is considered to be the golden bearish crossover by many professional traders. Currently, the price is testing the dynamic resistance of the 100 days SMA at 1.11381.This level is going to provide significant amount selling pressure to the EURUSD pair since the triangle floor which is now the resistance also coincide with the 100 days SMA. In the eyes of trained professional, the pair might test the 200 days SMA at 1.11748 level before it again starts its bearish move in the market. This level is also strengthened by the triangle top resistance level which lies at 1.11748 level also. Professional traders are overly cautious about this most significant level since price might exhibit false spike before it runs down again. If the critical resistance level near the 1.11748 level holds then we will see a strong bearish move in the market which will ultimately challenge the first critical support level at 1.08547.From that level, we might see a decent bounce in the price but ultimately this level is most likely to be taken out by the seller. A clear decisive break of the price below that level will bring further downward momentum in the pair towards the next critical support level at 1.05166.On the contrary, if the pair manages to breach the 100 and 200-day dynamic resistance level then the overall sentiment of the EURUSD pair will be change to a great extent. A valid break of the price above the critical resistance level at 1.11748 will bring fresh buying pressure in the market. The first initial bullish target for the pair would the critical resistance level at 1.13615.A valid break of the price above that level will bring further bullish rally in the EURUSD pair towards the key resistance level at 1.16120.
Weekly chart analysis for the EURUSD pair
Figure: Weekly chart analysis for the EURUSD pair
The EURUSD pair is testing the 50% Fibonacci retracement level in the weekly chart drawn from the high of 23rd August 2015 to the low of 29 November 2015.In the last week, the pair managed to close above the 50% retracement resistance level which is at 1.11215.However, there is very little room for the bullish move since the long term bearish trend line resistance is situated at 1.11750.This level is going to provide significant amount resistance to the EURUSD pair since there is a strong cluster of resistance in the weekly chart. Professional traders will be looking for bearish price action confirmation signal near that level to enter short in the EURUSD pair. The first initial bearish target for the pair would the newly formed minor trend line support level at 1.08751.The pair is most likely to find decent support from that level and again head towards the sloping bearish trend line resistance level. A daily closing of the price below the critical support level at 1.08751 level will bring strong bearish momentum in the market which will ultimately challenge the long-term bullish trend line.
Summary: The overall sentiment of the EURUSD pair still remains strongly bearish in the upcoming week despite the strong bullish run in the last week. There has been a golden bearish crossover of the 100 and 200 days SMA in the daily chart and the price is also trading near critical resistance level at 1.11381.Until and unless the pair manages to breach the 200 days SMA and weekly 61.8% Fibonacci retracement level we will be looking to sell this pair near critical resistance level. Due to the ongoing FED pending interest rate hike decision and U.S presidential election, it is highly imperative to use bearish price action confirmation signal before we enter short in this pair.