Despite of the positive fundamentals from Germany last Wednesday which showed an increase in the factory orders, which was better than expectations, the EUR/USD depreciated strongly since there were fears that Greece is just postponing its bankruptcy but not getting rid of it.
And what make things getting worse! When Moody’s downgraded the credit rating for Portugal’s debt by four points from Baa1 to Ba2, which caused a wave of panic in the financial markets and gave traders a reason to believe that the debt crisis is much deeper and deeper than anyone might think and seriously dangerous.
Technically, according to the daily chart, we still in a consolidation phase, trapped inside the triangle, since the bias is bearish in nearest term testing the lower line of the triangle at 1.4150/ 1.4102, a clear break below 1.4102 would open the door for further bearish pressure testing 1.4000 key support area, if the support level - 1.3968 – is taken out, I guess the next target would be around 1.3350 level!!
I recommend waiting for a clear break up/down, the market usually pulls-back to broken level before continuing its journey up/down?!!
Very important : The last bullish breakout on daily was confirmed by RSI(14) at 1.4795 the high of 27 April 2011 , since this level was taken out by buyers the next day , so the market was supposed to be ready for a big consolidation by testing one of these areas 1.4493 - low of 26 April , 1.4156 - low of 18 April 20100 , 1.4026 - low of 28 March 2011 , before going up again towards 1.5500 levels , the market already finished testing these levels add to that RSI on daily is above the 30 line , then the bullish scenario still strong and on the horizon , unless we have a daily RSI close below the 30 line , I guess this is supposed to happen around 1.3700/800 levels , then the market would pullback for the last time towards 1.4000/100 before the big fall towards 1.3000 levels , if the last scenario happens , the EURO needs at least 4 months to recover and back towards 1.4000 levels...so we need to watch the daily RSI ?!!!
Monthly support and resistance levels: (July 2011)
Resistance: (1.4680) main, where correction is possible, break would test (1.4885), the next levels are (1.5095) and (1.5300)…For buyers the bullish zone is above 1.4680
Support :( 1.4265) main, where correction is possible, break would test (1.4060), the next levels are (1.3850) and (1.3640)…For sellers, the bearish zone is below (1.4265)...
The neutral zone is between (1.4265 - 1.4680) where it is recommended to evaluate activities on daily and weekly.
The pivot level for this month is (1.4475)…
Monthly : use weekly and daily close ;
Above 1.4680 very bullish trend..
Between 1.4475 - 1.4680 light bullish trend.
Between 1.4475 - 1.4265 light bearish trend...
Below 1.4265 very bearish trend...
If we have a weekly close below 1.4265 , the market may drop/test 1.4885 very soon ?!!
Weekly support and resistance levels: (11 Jul - 15 Jul 2011)
Resistance: (1.4335) main, where correction is possible, break would test (1.4460), the next levels are (1.4580) and (1.4705)…For buyers the bullish zone is above 1.4335
Support :( 1.4090) main, where correction is possible, break would test (1.3965), the next levels are (1.3840) and (1.3715)…For sellers, the bearish zone is below (1.4090)...
The neutral zone is between (1.4090 - 1.4335) where it is recommended to evaluate activities on 60 min and 240 min.
The pivot level for this week is (1.4215)…
Weekly :use 1 hour and (4 hour ..recommended).
Above 1.4335 very bullish trend..
Between 1.4215 - 1.4335 light bullish trend.
Between 1.4090 - 1.4215 light bearish trend..
Below 1.4090 very bearish trend..
Trend Direction is Downward , the trend will remain valid as long as stability is below1.4390, a daily close above this level may lead for a bullish move towards 1.4550/1.4720 levels…
Recommendations : Upon the chart and the explanation posted above , my recommendation is observing trading today and following the daily updates for more confirmations !
Monday 11 July 2011 08:36 AM