EUR/USD Technical analysis Jan 19th – 23rd
Sometimes technical analysis loses its importance and relevance. Last week it was a good educational lesson for many traders than Technical analysis without sound fundamental backup is not enough to make you win in the market.
EURO has been under pressure, technically and fundamentally and just stabbed on its back by its next door neighbor Swiss franc. After opening the trading positively last week many expected the pair to have a decent corrective wave however all those who went against the market with their corrective speculations learnt a good lesson that trend is your best friend. With the European Justice Court’s justifications for the OMTs the bears took the market and then flooded it with the SNB’s 1.20 floor scrapping. , the bears kept it stronger for the remaining of the week pushing the pair to the edge of its first trading day levels back in January 1999.
For the week the pair started at 1.1850 and right away hit its resistance level at 1.1870 level before bouncing off to make historic lows. With Thursday’s SNB CHF tsunami EUR/USD took its part and slammed all the way down towards its 11 year lows at 1.1459 levels. Last time the pair traded at this level was back in November 2003.
At the moment, the pair has broken below all its main support levels and moving on a clear bearish trend. Especially ahead of this week’s ECB meeting and Greek elections, it seems like there will not be much of change in the market and traders should be ready for strong volatility.
On every time frame, the price structure remains lower peaks and lower troughs with strong bearish momentum. Only on monthly time frame it appears that historically 1.15 zone has been a strong support and resistance level, however until the ECB decision is made and the Greek poll results are announced there is not much to talk about any reversals.
The current price remains below all three; 20, 50 and 100 day SMAs with strong bearish momentum and a clear bearish price action development concluding the bearish as intact with targets towards 1.15 level and beyond.
Alternatively, a failure to break below the 1.15 support level would create a consolidating scenario with targets towards 1.1870 resistance level.
However, with the current bearish momentum strength traders should not be surprised if the pair moves towards 1.10 and 1.00 levels or even beyond these levels as the expected QE program could break the supply and demand equilibrium in the market.
Resistance levels: 1.1580 (R1) 1.1645 (R2), 1.1760 (R3)
Support levels: 1.1500 (S1), 1.1360 (S2) and 1.1100 (S3)