There is a certain satisfaction for a short term trader, when a long term target gets hit. But right now, after waiting for the 1.2740 test for several weeks, I am a bit lost on what’s next for the EUR/USD, not to mention, we have ECB and Payrolls next week, with all the either side of the board volatility such news tend to have.
From a fundamental view, we know the US will close the QE chapter for good this October, trimming the last $15B of facilities. We also know the ECB is barely starting with facilities, so from that side, the downside continues to be favored on Central Banks imbalance.
Technically, the weekly chart continues to show the pair extremely oversold, with RSI at 18.4 and an over 1000 pips almost straight decline. But at the same time indicators continue to head lower and show no aims to reverse bias. Furthermore, 20 SMA has turned strongly south and converges now with 100 and 200 ones, clearly reflecting latest dollar strength against its European rival.
In the daily chart, early momentum corrected partially higher but turned back south while RSI stands at 23 and 20 SMA capping the upside now in the 1.2920 price zone. Bottom line, bears still rule: some consolidation could be expected earlier next week, with recoveries up to mentioned 1.2920 not really affecting the dominant trend, but indeed mining sentiment among bears. Immediate support on the other hand, stands at 1.2660 and once below, the pair can quickly extend down to 1.2600 short term, thus once 1.2660 gives up, doors are open for a run towards the 1.2500 figure. If the decline continues steady with USD positive data sending price below this last by the end of the week, chances of an upward correction despite oversold readings will reduce even further, with 1.2740 then as a critical resistance for the rest of the month, and 1.2300 price zone becoming the next probable target.
View Live Chart for EUR/USD
From a fundamental view, we know the US will close the QE chapter for good this October, trimming the last $15B of facilities. We also know the ECB is barely starting with facilities, so from that side, the downside continues to be favored on Central Banks imbalance.
Technically, the weekly chart continues to show the pair extremely oversold, with RSI at 18.4 and an over 1000 pips almost straight decline. But at the same time indicators continue to head lower and show no aims to reverse bias. Furthermore, 20 SMA has turned strongly south and converges now with 100 and 200 ones, clearly reflecting latest dollar strength against its European rival.
In the daily chart, early momentum corrected partially higher but turned back south while RSI stands at 23 and 20 SMA capping the upside now in the 1.2920 price zone. Bottom line, bears still rule: some consolidation could be expected earlier next week, with recoveries up to mentioned 1.2920 not really affecting the dominant trend, but indeed mining sentiment among bears. Immediate support on the other hand, stands at 1.2660 and once below, the pair can quickly extend down to 1.2600 short term, thus once 1.2660 gives up, doors are open for a run towards the 1.2500 figure. If the decline continues steady with USD positive data sending price below this last by the end of the week, chances of an upward correction despite oversold readings will reduce even further, with 1.2740 then as a critical resistance for the rest of the month, and 1.2300 price zone becoming the next probable target.
View Live Chart for EUR/USD
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