Kangarootail.com » EUR/USD

EURUSD: Further Downside

admin — Fri, 30 Jul 2010 13:32:19 +0000

Sharp drop in early European trading and a bounce that fell short of closing above the hourly EMA10 should produce further downside in the US session. The 1.3045 was taken out, held during a retest, and is now acting as an important resistance level. There is strong support at 1.2965, and I expect price to move there and pause. A break below 1.2965 could see a quick move to 1.2890.

RSI has broken below its rising trend line support, and is expected to stay in bearish territory, below that trend line.

My short trade is in play and I tightened the stop to 1.3093 (entry). Target is still 1.2345.

Hourly Chart:

EURUSD: Caution, lack of upside momentum

admin — Thu, 29 Jul 2010 13:46:07 +0000

The break of 1.3045 finally came last night, but there is very little follow through. The 3-day sideways consolidation phase should have produced a more explosive upmove, and the fact that price could only rally 40 points within the first 4 hours of the break may be a sign that the Dollar is about to make a comeback. The EURUSD is facing strong resistance in the 1.3120…1.3130 area, where the 61.8% Fibo retracement level of the 1.5143-1.1875 range lies, and the 1.27 extension of a recent hourly range. There is a bearish divergence forming on the daily RSI chart. Hourly RSI is bullish looking with a break above the rising trend line, but is in overbought territory.

Many other currency pairs (AUSUSD, NZDUSD, USDCHF, USDCAD) are at major key support/resistance levels, and show early signs of topping/bottoming out. It’s too early to declare the beginning of a USD rally yet, but the evidence is mounting that it may just be around the corner (we may see it within a day or two).

I went short at 1.3092 with a tight stop at 1.3145. This is clearly a trade against the daily trend, but low risk/return and major structure support in the 1.3090..1.3125 area are in favor of the trade. The 1.3090 area was also major resistance in late 2008 and early 2009. 1.3250 is a too obvious resistance area and would encounter a whole army of bears that will go against it at that level. I believe it is likely we will see the pair roll over ahead of this level, and the 1.3090…1.3125 level may well be it.

My short entry at this level is also attempting to trade a 3-Drives pattern that has formed on the daily chart in the 1.1875-1.3106 range. Target for the trade is 1.2345, the 38.2% level of this range.

Hourly Chart:

Daily Chart:

EURUSD: Long position closed

admin — Wed, 28 Jul 2010 21:14:30 +0000

I exited my long position at 1.2978 for a 32 point profit due to the close below the hourly EMA48 and lack of upside follow-through after 3 attempts to break higher.

EURUSD: Further Upside

admin — Tue, 27 Jul 2010 13:26:44 +0000

The pair broke to new highs in European trading, and further upside is expected. Hourly RSI is still capped by a declining trendline, which is a concern for the long trade. But there’s plenty of scope for a sustained rally into the 1.31’s and even 1.32’s.

I tightened my stop to 1.2873.

Hourly Chart:

EURUSD: Bullish consolidation, long

admin — Mon, 26 Jul 2010 13:59:14 +0000

Converging moving averages last week were followed by a failed downside breakout, and price has consolidated near hourly highs since. Good 38.2% Fibonacci support on the overnight pullback and immediate bounce back above the hourly EMA10. Really bullish looking, with hourly RSI staying in bullish territory and room for upside. I’m expecting a move to the 1.27 extension of last weeks hourly move and key resistance at 1.3000. I went long at 1.2946 with a stop 1.2777, and a soft target of 1.3250.

Hourly Chart:

EURUSD: Running into strong resistance while completing a 3-Drives Pattern

admin — Fri, 16 Jul 2010 04:59:27 +0000

Strong third leg of a 3-Drives pattern is unfolding on the dailies, yet I still I see the entire move as corrective, mostly because it’s the first meaningful correction since the large drop that started in January 2010. Price is now close to the 38.2% Fibonacci retracement of the 1.3690-1.1875 leg at 1.30, the 100-day moving average, and we’re right at VERY strong historical resistance near 1.2960. The completion of a 3-Drives pattern right at these strong resistance levels shifts the bias in favor of the bears.

The 3-Drives pattern could even be interpreted as a Gartley Sell pattern since the separation of the 2nd and 3rd legs is a lot less pronounced than the separation of the 1st and 2nd legs. This pattern would call for a move to 1.23.

But the daily chart is still bullish, the daily EMA10 points up, and the daily uptrend needs to be respected for now. A short is a bit premature at the moment, but I’m watching price action closely over the next few days for signs of a trend turn in the 1.2950..1.3050 area, which would offer a short opportunity with a 1.2480 minimum target.

Daily Chart:

EURUSD: Further Upside

admin — Wed, 14 Jul 2010 04:40:07 +0000

Trading from Europe for the next two weeks and may not post daily. Today’s price action in the EURUSD offers a long opportunity. The sharp rebound after completing a 3-Drives pattern on the hourlies suggests further upside over the next few days with a target of 1.2865..70, which is just ahead of a key historical support/resistance zone at 1.2960.

A temporary drop in early European trading could offer an entry into the uptrend. Ideally, price would pull back to the 61.8% Fibo of the recent upmove range, to 1.2655, and this move may coincide with the hourly RSI adjusting back to neutral, opening the way for another upleg.

Hourly Chart:

EURUSD: Rolling over

admin — Thu, 08 Jul 2010 13:00:36 +0000

RSI has been capped by a declining trendline ever since the rally on 7/1. It certainly appears that the pair is rolling over now, and we’re also near trend line resistance on the daily chart with daily RSI very close to overbought. Expecting the pair to turn down from here, possibly after one last push to the upside (exhaustion top.)

Hourly Chart:

Daily Chart:

EURUSD: Further Upside

admin — Tue, 06 Jul 2010 14:59:25 +0000

The Euro just to new highs and the upmove is expected to continue, possibly to 1.2730..85 which is an area of support/resistance, a prior trend line, and the 50% Fibonacci retracement of the last daily downleg. 1.2730 is also the 1.27 extension of the hourly pattern.

Hourly RSI is capped by a bearish trend line which is expected to give over the next few hours. Daily RSI is approaching levels not seen since the Euro started to fall in December 2009, and is not attractive enough for a long at current levels.

My long term bias is still bearish, and if the pair rolls over near above mentioned levels, I will look for a short entry opportunity. Until then I’m sidelined.

Support: 1.2470 HSpptRsst 1.2400 HSpptRsst 1.2300 HSpptRsst

Resistance: 1.2730 1.27Ext, DTL, HistSpptRsst 1.2783 DFibo50 1.2830 1.618Ext.

RSI: Hrly: mixed, capped by bearish trend line, Dly: bullish

Hourly Chart:

Daily Chart:

EURUSD: Consolidation near highs

admin — Thu, 01 Jul 2010 15:04:10 +0000

Whoa! Quite the rebound, 270 points in just a few hours. Looking at the hourlies, they had completed a series of bearish correction patterns (2 waves, ABC), of smaller and larger time frames, and the upswing could be seen as an overlap of the rebound against all of these.

There’s really no strong fundamental news that justifies a move of this magnitude (ECB lending and PMI really couldn’t be it). A lot of the advance was probably powered by short covering, since there was quite a good short opportunity setting up yesterday. So it remains to be seen if this upswing has any follow through and will extend into the 1.25’s over the coming days. I expect consolidation near the highs for the rest of the day and into Asia. A collapse back to 1.23 wouldn’t be surprising, and a move below 1.2140 would confirm that this was a failed attempt to push higher and would put 1.1880 into focus.

If the gains can be sustained, I expect the pair to march higher toward 1.2570…1.2650 next week. A move lower should be expected from there, since it would complete a corrective 2-wave pattern that started at 6/8.

Support: 1.2300 HSpptRsst 1.2208 HSppt, L-6-23 1.2150 L-6-29, KeySppt

Resistance: 1.2465 H-6-21, HRsst 1.2570 DFibo62 1.2671 H-5-21

RSI: Hrly: bullish and o/b, Dly: neutral, rolling over

Hourly Chart: