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On the last Friday’s session the EURUSD dived once again but this time with a narrow range and closed near the low of the day, also managed to close below Thursday’s low, which suggests a strong bearish momentum.
The pair continues to trade well below the 10, 50 and 200-day moving averages that should act as dynamic resistances.
The key levels to watch are: the 10-day moving average at 1.0981 (resistance), a daily resistance at 1.1097, July swing low at 1.0952 (resistance), a daily resistance at 1.0900 and a daily support at 1.0819.
EUR/USD: The View From Weekly & Monthly Charts
EURUSD weekly chart: suggest that new trend lows are likely in the not too distant future.
The whole pattern in place since the lows in March 2015 looks to be a double top as a consolidation. That would be confirmed with a weekly close below the 1.0523 level and suggest a move towards the mid to low 0.90’s. The broad based channel in place since 2008-2009 would likely provide interim support around parity ahead of that move.
EURUSD monthly chart: Deja vu all over again.
While not identical, the path being followed by EURUSD between 1985 and 1999 and that seen from 2002-2016 has been remarkably similar. In the prior period EUR as its components followed more the “motorway route” while this time it has followed the “scenic route”. However, in both instances, the destination has been virtually identical. A multitude of supports exist in the 1.0433-1.0588 area. While there is then interim support around parity, major supports come in closer to .9600
A move equal in nominal terms to that seen in the last cycle (1992-2000) would suggest a low below .9400 while a move equal in percentage terms of approximately 45% would suggest a move towards .8800. The final level of note as an extended target (Not our base case at present) would be the low posted in 2000 just above .8200.
For those that think this extreme let us not forget that the all-time floating exchange low posted in 1985 (EUR as its components) was .6444 (When GBPUSD posted a low just above 1.05- our extended GBPUSD trend target).
Citi maintains a short EUR/USD position* in its technical portfolio.
source
The single currency marked a volatile session against the dollar on Monday. The new week started with trading even lower as the common currency nears a seven month low level of 1.0822. The short-term expectations remain bearish.