Technical analysis for EURUSD: 28th November – 2nd December

The EURUSD pair was falling sharply after the selection of the newly elected U.S president Donald Trump. Sellers took the full control of the pair after Donald Trump gave his victory speech on 9th November. The surprised bearish move of the market was not anticipated at all by the investors since the dollar was most likely to weaken due to Mr. Trump anti-social mentality. But surprisingly the dollar found immense strength in the market in the event of the newly elected president. The recent ongoing issue of the pending interest rate hike decision is also causing a great deal of fear into the mind of investors. If the FED hike their interest rate during their FOMC meeting in the month of December then the dollar will be refueled with fresh buying pressure in the market. According to the FED interest rate hike monitor tools, there is 91.3% chance that the FED will hike their interest rate in the month of December. The last two-month performance of the U.S economy strongly favors the rate hike decision in the month of December. To be precise the EURUSD pair has very little room for correction in this year since all the major economic events are going to favor the green bucks in this year. However, if ECB president Mario Draghi comes with a hawkish speech in the ECB press conference in the upcoming week we might see some retracement in the EURUSD pair. The upcoming is also packed with the U.S non-firm payroll data and a strong positive news release will make the dollar broadly stronger against its all major rivals in the market. Since the EURUSD pair is testing the critical support level which is the low of December 2015, investors are staying on the sideline until the market clearly states its next move.

Daily chart analysis for the EURUSD pair

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Figure: Technical parameter in the EURUSD pair

Last week the EURUSD pair exhibited a decent bounce after hitting the critical support level at 1.05181.This level is going to play a significant role in the next move of the EURUSD pair since this point has previously been tested on 3rd December 2015.After hitting the critical support level the market formed an indecision candle in the daily and later on the next day a strong bullish candle was printed. The bullish morning star pattern at the key support level is definitely a bullish reversal signal for the EURUSD pair but fundamentally the pair has no scope for the bullish correction unless ECB president Mario Draghi comes out with an extreme hawkish speech. The daily stochastic indicator is also in the oversold region which gives strong support to the bullish price action confirmation signal. The first bullish target for the EURUSD pair would be critical resistance level at 1.07069.If the pair manages to breach that level then we will see some fresh buying pressure in the market which will lead the pair towards the next critical resistance level at 1.08476.This level is going to provide a significant amount of selling pressure to the EURUSD pair and professional price action trader will be cautiously waiting for bearish confirmation signal to enter short in this pair at that level. On the contrary, if the pair breaks the current support level then the next target for the EURUSD pair would be the key support level at 1.04521.If the pair manages to breach that level then we will see another sharp fall in the EURUSD pair for a prolonged period of time.

Weekly chart analysis for the EURUSD pair

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Figure: Weekly chart analysis for the EURUSD pair

The EURUSD pair has formed an indecision candle on the weekly chart at the critical support level at 1.05181.Though the EURO has very little room to move in the upside direction but technically the pair is forming bullish reversal pattern on the weekly chart. If the pair manages to find fresh buying pressure in the market then we might see some bullish retracement in the EURUSD pair. In order to see a bullish move in the EURUSD pair ECB president Mario Draghi must come with a solution to strengthen the EURO against its all major rivals. The daily RSI indicator in the weekly chart still needs to move further south to be in the oversold region perfectly which strongly suggest that the fall is not yet completed in the weekly chart. If we see a bullish price action confirmation signal in the weekly chart then the first bullish target for the EURUSD pair would be the next critical resistance level at 1.08498.But professional traders strongly suggest not to enter long in this upcoming week since there is no bullish reversal confirmation signal on the weekly chart.

Summary: The EURUSD pair is currently trading above the critical support level at 1.05181.In the daily chart, we are seeing clear bullish reversal signal but the weekly chart still suggest bearish momentum in the market. This week is going to play important for the EURUSD pair because if the weekend up with the bullish move then we will have bullish price action confirmation signal in the daily and weekly chart. Considering all the parameters the overall bias for the EURUSD pair still remains slightly bearish. But if ECB president initiates QE program then the pair will find some solid foundation to build bullish momentum. On the contrary, the ADP non-firm data is also going to be the price driving catalyst for this pair in the upcoming week.

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