EURUSD,Sideways move before the next breakout,1.2890 & 1.2991 Are Important Pivots !

As shown on the 4 hour chart, bearish breakout has been confirmed this early morning at 1.2890, but the pair was unable break below this level , pulled back to test the key resistance 1.2991 !!!!

Now, what options do we have ?!!!

The first option : 4 hour close below 1.2890 followed by RSI break below 40 would bring massive bearish move and target 1.2700 levels, maybe lower !!!

The second option : 4 hour close above 1.2991 would mean we had false bearish breakout and strong move is expected at the opposite direction, then the pair might target 1.3150/200 levels, but be careful, I wouldn't recommend buying above 1.3000 , It's risky too much, we have strong sloping line around 1.3150/200, comes from -1.4939 - 2011 high - only a miracle would make the EURO pass this line !!

Recommendations : Selling the pair with a 4 hour closing below 1.2890 targeting 1.2700 , stop loss at 1.3010

Best Regards 

Haitham

Views: 676

Tags: EUR/USD, EURUSD

Comment by Haitham653 on October 16, 2012 at 6:12am

Just wanna clarify few things, above 1.3000 we have 2 sloping resistance lines, the first one comes through 1.3171 and 1.3070, the second one is the most important , it comes through 1.4939 high of May 2011 and 1.4548 high of Aug 2011 !!!

Anyway, breaking above 1.2991 is not necessary for strong gains, I think the first challenge would come around 1.3052, stability above this level with daily close would threat 1.3212..

The second line that comes from 1.4939, protects the consolidation from 1.4939 in medium term ,a clear break above the second sloping line followed by a daily close above 1.3212 would target 1.3500 levels and might end the consolidation from 1.4939, this scenario suggests that the EURO trades at crossroad now !!!

However, I believe that miracles sometimes happen these days, but the smart question why the EURO would go beyond 1.3200 levels !!!

I think this big balloon because of U.S elections , once It's finished  and Obama wins I think things will back to normal !!!

Comment by Haitham653 on October 16, 2012 at 6:43am

Fundamental focus today is on:

1- German ZEW Economic Sentiment : at 09:00 AM GMT , Previous : -18.2 , this indicator is published based on a survey of investors and institutional analysts, Above 0.0 indicates optimism, below indicates pessimism, however , this indicator can be an early signal of future economic activity !

2- Consumer Price Index (CPI)/ U.S : at 12:30 PM ,Previous: 0.1% , It shows change in the price of goods and services purchased by consumers, excluding food and energy, It also represents consumer prices for the majority of overall inflation! any gains would be good for USD , expectations for today :0.2% !!

Comment by Haitham653 on October 16, 2012 at 7:06am

Morning Peter 

Yes I agree with you , breaking above 1.3200 is not necessary for breaking above 1.3500 levels, the pair might test 1.3400 then pullback to 1.3000 , anyway some analysts say that the euro would range between 1.2600/1.3400 the next few coming months and the first half of 2013 !!

I don't buy it but it might happen, nothing is impossible !!! 

If the pair breaks above 1.3200 and fails to break above 1.3500 and back again below 1.3200 , yes It might test 1.2600 once again , technically this scenario can easily happen !!!

Regards

Haitham  

Comment by Romano on October 16, 2012 at 8:03am

Well, at least we seem to gonna hit that 3025 I said before, its very close now

Comment by Haitham653 on October 16, 2012 at 8:25am

According to H1 chart, the pair is rising with low momentum, any move above 1.3000 most likely will be to limited by 1.3052, a clear break above this level would challenge 1.3200 levels !! 

A rejection from 1.2991 with 4 hour close below this level might threat 1.2890 levels !!

Comment by Haitham653 on October 16, 2012 at 9:00am

According to H1 RSI , we're in extended bearish divergence- bullish reversal in short term - this scenario suggests more gains before possible - final topping - you need to keep an eye on 1.2991, stability above this level would keep pushing upward, below 1.2991 the bullish momentum is weak...

Anyway, H1 RSI break below 30 would confirm the last top and would reverse the pair to downside !!!

  

Comment by Haitham653 on October 16, 2012 at 9:15am

This chart shows how extended bearish divergence works :

An hourly close below 1.2890 followed by RSI break below 30 would completely eliminate the bullish phase !!! 

Comment by Haitham653 on October 16, 2012 at 9:56am

Stability above 1.2991 would mean that there's no enough momentum to move down, and the pair might continue rising higher than 1.3015 - the recent high - to get more momentum and try moving down once again......  

Comment by Romano on October 16, 2012 at 10:00am

Lets talk something different, this is 15min chart and I wanna show u VSA or volume spread analysis. You can see that tinny little bull pin bar had just as much "power" of volume in as whole previous big bear candle. I dont know if they want to only reach last high or continue bull, but this alone make it dangerous to short unless different price action happen! Btw 4h and 1h look like double bottom pattern and whole daily look like double bottom forming itself so at least I would guess completion and creation of harmonic pattern "W" before drop - if any. regards

Comment by Haitham653 on October 16, 2012 at 1:34pm

According to my medium/short term analysis , Rising is supposed to be stopped by now, the EURO might make another small rise toward 1.3100 level, then sideways move between 1.2960/1.3100 is suggested or bearish move toward 1.2700 the rest of the week !!!

Fundamentally ,I'm almost sure ,the EU Economic Summit is supposed to take the EURO down toward 1.2800/700 levels !!!

Best Regards...

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