Technical analysis for EURUSD: 19th December – 23rd December

In the last week, the EURUSD pair has broken a critical support line in the daily chart after the FED hike their interest rate in the FOMC meeting minute. Currently, the EURO has breached the critical support level at 1.05255 and hit a record low since 2003.The pair suffering from extreme selling pressure in the market and currently the sellers are dominating with full fuel. The last two-month economic performance was extremely great and with the recent interest rate hike, the dollar is now trending high with intensive strength in the market. Most importantly the EURO was further weakened in the last week after ECB president Draghi gave his dovish speech in the press conference. Most of the professional trader in the forex industry are now cautiously waiting for a minor retracement in the EURUSD pair since the price is trading too low to execute a new short order in the market.

In the upcoming week, there is no major news release for the U.S economy. However, on Monday the minor economic news will be released on German Ifo Business Climate. If the news release comes positive then we might see a minor bullish retracement in the EURUSD pair. Other than this news release in the market we don’t have any important news release for the next whole week. That means there will be low volatility in the market and the EURUSD pair might exhibit ranging movement in the market. Those who want to trade the EURUSD pair should try to enter short in the market after some bullish retracement in the pair. Buying the pair at the current level might be tempting but in the absence of definite bullish reversal signal and the current intensive selling pressure in the market strongly argues against going long in the EURUSD pair.

Daily chart analysis for the EURUSD pair.

Figure: Technical parameter in the EURUSD pair

The EURUSD pair has fallen sharply in the market after it broke the critical support level at 1.05071.This level was the last nearest key support level for the EURUSD pair. Most of the traders were waiting to for bullish price action signal to go long into this pair. But due to the interest rate hike by the FED the market broke the support level and now it is getting ready for another strong bearish rally in the market. The first bearish target for the EURUSD pair would be the next critical support level at 1.02954.This level is going to provide some strong support to EURUSD pair and professional traders will be looking for bullish price action signal to enter long into this pair. However taking a long position at the current level will be extremely risky since the EURUSD pair very week both fundamentally and technically. If the price manages to retrace back towards the first critical resistance level at 1.05144 than the traders will be looking bearish price action confirmation signal to execute short orders in the market. However, if the price manages to breach that level then we will see a nice bullish correction in the pair towards the 100 days daily moving average. Currently the daily stochastic is on an oversold region which means the buyer might try for a bullish retracement in the daily chart once it finds some strong support level in the market.

Weekly chart analysis for the EURUSD pair

        

Figure: Weekly chart analysis for the EURUSD pair

In the last week, the EURUSD pair has broken the long-term bullish trend line in the market and created a record low in the market. After it breached the trend line support at 1.05556 it strongly rallied downward and created a new low in the market towards the 1.03508 level. After hitting that level the EURUSD pair managed to find some buying pressure in the market and eventually closed at 1.04492.Most of the professional price action traders are cautiously waiting for the bullish retracement in the EURUSD pair towards the broken trend line support level which turned into strong resistance. Professional price action traders will be looking to short in the EURUSD pair with bearish price action confirmation signal at 1.05556 level. But due to the strong selling pressure, the market might fail to retrace back to that level in the next week since there is no major news release for the U.S dollar and the EURO. If the pair manages to go above the critical resistance level at 1.05556 than we will see a nice bullish retracement in the EURUSD pair towards the next critical resistance level at 1.09055.This level is going to provide a significant amount of selling pressure to the EURUSD pair since there is a huge cluster of price in the weekly chart. In order to overcome this resistance area, the Euro needs a strong fundamental and technical back at that level.

Summary: There has been a massive fall in the EURUSD pair in the last week after the FED declared their rate hike decision in the FOMC meeting minutes. The pair created a record low in the market and sellers are in the driving seat for this pair. In the next week, we don’t have any major news release so we will be seeing low volatility in the EURUSD pair. Considering the technical and fundamental parameter the over bias remains strongly bearish for the EURUSD pair for the upcoming week. However, a minor bullish retracement might also take place in the market since the pair has been falling sharply in the last few months.

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