Technical analysis for EURUSD: 17th October -21st October

The medium-term uptrend in the EURUSD pair is at risk and the last week ended up with the strong bearish movement of the pair. The recent noise in the market has been furthermore intensified with the U.S interest rate hike decision. According to the economic researchers, there is only 6.7% of chance of rate hike in the month of October. But investors are in fear since they know 6.7% probability is not enough for the FED members to go in favor of the rate hike in this month. The upcoming presidential election is also giving fuel to prevailing chaos in the forex trading market. Though there is lots of uncertainty but traders are waiting patiently for the month of December FOMC meeting minutes. According to rate hike monitor tool, there is 67.2% chance that the FED will hike their interest rate in the month of December. Professional traders are overly cautious about the rate hike decision in this year since this thing is going to play important role in movement of the major pairs at least for the next six month of 2017.In the very starting from this week, the ECB president Draghi is going to brief about their economy. Professional traders are overly cautious about the upcoming speech of Draghi since the Euro might become extremely volatile at that time. The second major economic event for the Euro is the ECB press conference. Investors are in fear since the overall move of the EURUSD pair might shuffle on the event of this major economic news release. On the contrary, there are a number of important events for the mighty U.S dollar which is going to create nice volatility in the EURUSD pair. The consumer price index data which will be released on Tuesday is going to play an important role in the next week move in this pair.

Daily chart analysis


Figure: Triangle pattern was broken in the EURUSD pair

The price has broken the triangle support in the last week and the market has turned slightly bearish at the current moment. Technically the EURUSD pair is ready to fall heavily in this upcoming week but the Fibonacci retracement level is the only barrier that it has to overcome in the following week. The important Fibonacci retracement level is drawn from the low of 3rd December 2015 to the high of 3rd may 2016.Currently 61.8% retracement level lies at 1.09450 level. There is strong possibility that the market finds strong support in the 61.8% retracement level since the current strength of the U.S dollar is falling apart due to the postponed of interest rate hike decision. If the pair manages to bounce back from the 1.09450 support level the past week loss will be easily recovered. The first critical resistance for the EURUSD pair is at 1.11273 which is the ascending triangle base. If the pair manages to breach the triangle resistive zone then the next critical resistance will be 1.1426 levels. A successful break of that level will lead the pair towards the high of 3rd may 2016.On the contrary, if the pair manages to breach the 61.8% resistance level then we can see strong bearish momentum in the pair. The first bearish target for the pair would be critical support level of 1.07083.From that level, we might see some ranging move in the pair. However, the ranging move is not going to sustain due to the immense selling pressure and market sentiment. From that level, the pair is most likely to head towards the 1.05330 level. This level is going to provide a significant amount of support to the EURUSD pair. Professional traders will be overly cautious about that level since the medium term uptrend in the EURUSD pair started from that level.

Weekly chart analysis for the EURUSD pair


Figure: Weekly chart analysis for the EURUSD pair

The long term bearish trend in the EURUSD pair is currently at a vulnerable stage since the U.S dollar is pretty weak against its major rivals. Technically the EURUSD pair forming an ascending structure respecting the minor bearish trend line in the weekly chart. However, the price is still confined within a wide range in the weekly chart. Expert’s professionals are still expecting to for the bullish breakout confirmation in the weekly chart resistance. In order to establish bullish momentum in the market, the pair needs to overcome the weekly resistance at 1.12258.If the pair manages to breach that level then the pair will face the most important critical resistance level at 1.1600 level. A valid break of that level will confirm the end of the long-term bearish trend in the market. On the contrary, a valid break of the critical support level at 1.04807 levels is required to confirm the continuation of the long-term bearish trend.

Summary: The overall bias for the EURUSD pair remains bearish in this upcoming week. The conservative traders are waiting for the price to retrace back to the critical resistance level at 1.12078 level. If the price retraces back to that critical resistance level professional traders will enter short in this pair with bearish price action confirmation signal. On the other hand, if pair fails to retrace back then the short order will be executed in the market with the clear break of the critical support level at 1.09475.However,there is small chance that the price might again start exhibiting bullish momentum in the market from the 61.8% retracement level. So, if there is bullish candlestick formation near the 1.09475 level then we will remain on the sideline until a better trading opportunity presents itself in the market.