EUR/USD Complete Analysis - 19 November 2012
EUR/USD Weekly
EUR/USD Daily
EUR/USD H4
EUR/USD H1
Details
Technicals
The Euro is expected to complete its second shoulder bottom of the Inverted Head and Shoulders formation on Weekly and Daily at 1.26 (Fibo 50.0 of 1.2054-1.3176), before the price will advance signficantly higher (1.31-1.32 expected this year).
Recent price action indicates a potential bottom as the weekly/daily 1.2054-1.3176 ascending wave has had a 530 pips drop near its Fibo 50.0 level where it now completed a bullish weekly candle and on Daily is testing its faster MA after it broke above the 200 day MA and holds above the Fibo 61.8 level of 1.2730 before heading higher for a test of the 1.2800 resistance.
After the Head and Shoulders is confirmed, further weekly advances higher will meet important resistance at the range's middle resistance of 1.3498 and the confluence zone of the 200 period MA and the faster MA, as shown on the Weekly chart.
On the Daily chart, the price has been rejected at the ascendent support of the uptrend channel and is holding above its 200 day MA as it tests its faster MA and reaches for a test of the 1.2800 resistance.
Our setup is to buy on a break above the 1.2800 level at 1.2857 with a stop loss below the range and the channel support at 1.2751 and a target near the range resistance at 1.3094.
On H4 the price is holding above its 1.2742 pivot and is testing the faster MA before heading to the 1.2835 level.
Our setup is to buy on a break of the 1.2835 level at 1.2858 with a stop loss below the range at 1.2801 and a target at the middle of the range (1.2963) with a extension available at 1.3182.
The H1 chart provides a more short-term long opportunity on a break above the Fibo 100.0 level of 1.2690-1.2786 with a buy at 1.2810, a stop loss at 1.2789 and first target 1.2850 with a extension target at 1.2900.
Fundamentals
Our most important reasons to be long on the Euro are:
- The escalation of military conflicts between Turkey and Syria
- The escalation of military conflicts between Israel and Palestina
- Brent Oil will reach $115
- Fed will keep interest rates near 0 and will continue QE
- A cheap dollar which is needed in the post-Sandy reconstruction
This week will bring important events and econonomic data releases for both the Euro and the US Dollar.
Expected EU and US Economic Data for 19 Nov - 23 Nov
Monday
US
Existing Home Sales at 5:00 pm expected to rise slightly from 4.75m to 4.76m
Europe
German Bundesbank President Weidmann Speaks at 10:30 am
Tuesday
US
Building Permits at 3:30 pm expected to drop from 0.89m to 0.87m
Housing Starts at 3:30 pm expected to drop from 0.87m to 0.85m
FOMC Member Lacker Speaks at 4:00 pm
Fed Chariman Bernanke Speaks at 7:15 pm
Europe
German PPI at 9:00 am expected to drop from 0.3% to 0.2%
Eurogroup Meetings
Wednesday
US
Unemployment Claims at 3:30 pm expected to drop from 439k to 397k
Flash Manufacturing PMI at 4:00 pm expected to rise from 51.0 to 51.2
Revised UoM Consumer Sentiment at 4:55 pm expected to remain unchanged at 84.9
Crude Oil Inventories at 5:30 pm
Thursday
Europe
French Flash Manufacturing PMI at 10:00 am expected to rise from 43.7 to 44.1
French Flash Services PMI at 10:00 am expected to rise from 44.6 to 45.3
German Flash Manufacturing PMI at 10:30 am expected to drop from 46.0 to 45.9
German Flash Services PMI at 10:30 am expected to rise from 48.4 to 48.5
Eurozone Flash Manufacturing PMI at 11:00 am expected to rise from 45.4 to 45.6
Eurozone Flash Services PMI at 11:00 am expected to rise from 46.0 to 46.1
EU Economic Summit Day 1
Friday
Europe
German Ifo Business Climate at 11:00 am expected to drop from 100.0 to 99.6
Belgium NBB Business Climate at 4:00 pm expected to rise from -13.5 to -13.2
EU Economic Summit Day 2
Goldenschild Asset Management
Skype
davidbeckkett
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Comment by ravi on November 19, 2012 at 12:17pm -
great David @ his best
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Comment by Anupam Sharan on November 19, 2012 at 1:23pm -
I really like you analysis. Keep posting your comments.
Thanks!!!
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Comment by Oasis on November 19, 2012 at 2:01pm -
Thanks David, so clear and so comprehensive.
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Comment by Romano on November 20, 2012 at 12:34am -
I have a question, why would escalation between syria and turkey and between israel and palestine be bullish for euro?? And why should cheap dollar be good for sandy reconstruction when its a burden on importing resources needed for reconstruction and since its not about exports on that regard?
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Comment by Andre Hughes on November 20, 2012 at 7:21am -
The conflicts in the Middle East will cause the price of oil to soar on supply concerns and this in turn will drive the Euro up and the dollar down + a cheap dollar in the US and the Fed's monetary policy will put cheaper money into circulation and more money will be borrowed from the banks to fund the reconstruction as they dont need to rely on imports for this.
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Comment by Goodyear on November 20, 2012 at 10:10am -
Thank you very much for this detailed analysis David! It was a very interesting read, really kind of you to share it!
I do have a question though. I'm pretty new to technical analysis so excuse me if it's too basic of a question, but I see you're also using the 200 day MA to back up your predictions. On your daily chart, the last few days already closed well above the 200 day MA, however on the charts I'm looking at, there are either no candles closed above the 200 day MA yet or the first candle to close only slightly above it was yesterday's.
I realize this is because days close at different times for different brokers. The chart which doesn't have any candles closed above the 200 day MA (only tested it with wicks and bounced back like it were a resistance line) closed at GMT+0 while the other chart closed at GMT+2. These charts also don't have any sunday candles which I assume greatly affects how a MA looks like as well.
So my question is: Which daily chart data is really relevant? I assume it's yours, but does that mean daily chart data from these GMT+0 and GMT+2 brokers is useless for technical analysis?
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Comment by Tofail Ahmed on November 20, 2012 at 11:13am -
David, really you are the best for forex.
I wish your good luck.
Thanks,
Tofail
Comment
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