Technical analysis for EURUSD: 31st October – 4th November
The medium-term uptrend in the EURUSD pair is now facing bearish reversal pressure since the pair has broken the bullish trend line support at 1.10266 on the daily chart. Professional traders are strongly bearish on the EURUSD pair since there has been a golden bearish crossover in the daily chart. In the last the 100 days SMA has crossed below the 200 days SMA and the price also ended well below the critical support level. The burning issue of the interest rate hike decision by the FED has been mitigated to a certain extent since the other major fundamental news releases came in favor of the U.S dollar. Moreover, ECB president Draghi has clearly stated in the last conference that the European economy is struggling hard to cope with the global economic crisis. Professional traders are waiting patiently for the pair to retrace back to the initial resistance level to short this pair. Though the selling pressure is strongly prominent in the EURUSD pair but traders are a little bit cautious about the sudden strength in the pair on last Friday. In the eyes of trained professional the strong bullish closing in the last Friday is the sign of initial correction of this pair. Since the pair has started its correction it’s highly imperative to use bearish price action confirmation signal to enter short in the critical resistance level.
Daily chart analysis for the EURUSD pair
Figure: Technical parameter in the EURUSD pair
The EURUSD pair has clearly broken the bullish trend line support at 1.10266 level followed by a bearish crossover in the 100 and 200 days SMA. The price has fallen sharply after breaking the trend line support however it has found some temporary support near the minor support level at 1.08530 level. After forming a bullish pin bar near the minor support level the pair has started its correction towards the broken trend line which has turned into resistance. In the upcoming week, the pair is most likely to test the critical trend line resistance level at 1.10406.Though the resistance level is pretty significant but investors are in fear since the correction of the pair is heavily fueled up by fresh buying pressure. If the critical support level fails to restrict the bullish momentum of this pair then the next stop for this pair would be the dynamic resistance (100 and 200 days SMA ) level near the 1.11430 – 1.11771 level. These level is going to be the key point that 73% profitable trading opportunity for the traders. However, if the critical resistance zone near the mark 1.11430 – 1.11771 fails to limit the bullish momentum for this pair then we might again see a strong bullish run in the EURUSD pair towards the key resistance level at 1.16078.On the contrary, if the seller manage to take control of the market then the first bearish target for this pair would the low of 25th October 2010 at 1.08508.A clear decisive break of that level will bring the further downward momentum of this pair towards the next critical support level at 1.07741.This level is going to provide a significant amount of support to the pair since the price has respected this level frequently in the past. A clear decisive break of the key support level at 1.07741 level will bring strong selling pressure in the market in favor of the long-term bearish trend.
Weekly chart analysis for the EURUSD pair
Figure: Weekly chart analysis for the EURUSD pair
The EURUSD pair is still in the range movement in the weekly chart. Price has sharply rejected the 100 day SMA in the weekly chart and has bounced back from the minor support level at 1.08487 level. From that critical support level, the EURUSD pair has correct upward for more than 100 pips in the last week. Currently, the weekly critical resistance level is at 1.11450 level where the 100 day SMA lies. The pair is most likely to find strong selling pressure from that level. If there is bearish price action confirmation signal near the 100 days then we can assume that the bullish correction this pair has come to an end. On the contrary, if the pair manages to breach the 100 days SMA dynamic resistance level then we will see a strong bullish rally in the pair towards the bearish trend line resistance at 1.15220.Traders are waiting patiently to short this pair near the critical resistance level with reliable bearish price action confirmation signal. The first bearish target for this pair would be the weekly support level at 1.08398 level. A valid break of that support level will lead this pair towards the next critical support level at 1.06423.The pair is most likely to find strong support from that level since the minor bullish trend line support lies at that point. A clear decisive break of that support level will bring strong selling pressure in the market which will ultimately lead this pair towards the next key support level at 1.01535
Summary: The EURUSD pair has turned strongly bearish after the break of the medium-term bullish trend line support level at 1.10266.The pair is most likely to find immense selling pressure near that level. However, due to the strong bullish correction, there is small chance that the pair could climb back towards the 100 day SMA in the daily chart before it falls sharply again. Considering all the parameters the overall scenario for the EURUSD pair is strongly bearish at this moment. Selling the pair at critical resistance level with bearish price action confirmation signal will be our top priority.