Wednesday

EUR/USD Technical Analysis





The euro dollar pair is following the equidistant chart pattern in the 4-hour view. The trend line has hit the channel 4 times so far, indicating that the pattern is strong, which is also supported by the 3 month long duration. Recently, the line hit the channel at 1.244 and proceeded to fall as expected, albeit meeting some resistance. More resistance is likely to be met at 1.225, and if that is broken, the trend line is expected to fall and meet the next resistance at 1.2159.  However, considering a long term view (of 30-60 days), the pair is expected the meet the 
end of the channel.













In the hourly view, the trend line hit the high resistance level at 1.244, lowered to 1.236 and is meeting another resistance level over there. However, the 4-hour view would suggest that it is likely that the pair would break resistance and follow the downward trend.

MACD shows that the trend is downward, however, it does not seem as strong as the bullish signals it gave earlier on the 3rd of August. Contrarian indicator Stochastics shows a downward trend as well and currently hovers at 31.50. A bullish or bearish signal is not visible and should only be treated seriously once the 20 or 80 lines are crossed. The Relative Strength Index roughly corresponds with Stochastics as it hovers near the same 30 level. All 3 indicators agree with a downward pattern.

However, it must be noted that this isn’t strong and is meeting with a lot of resistance. The 10 day EMA corresponds with the current price level so a strong downward and upward trend cannot be predicted. Indicators may produce fall signals until resistance points are broken strongly.

This can also be seen by using the same indicators in the 4-hour chart. While the MACD is bearish, it is still following an ascending pattern. The Stochastics are giving a bullish signal as well. This may result in the pair hovering at the upper levels of the channel for some time, but it is unlikely that the channel will be broken. By examining the last time when the pair hit the upper channel, it seems that the trend line seems to hover on the upper levels between 5 and 25 days.

Fundamental: Most industrial production data of the eurozone showed a decline. While the sentiment of the FX market is generally positive, there is some strong resistance and risk appetite has been on hold until the ECB or Fed introduces some measures. If not, a correction may be likely.

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