The EUR/USD pair has test for the third time the 1.2360 price zone this week, level that buyers had continued to defend. November has been a consolidative month for the pair, moving back and forth below mentioned low and 1.2600, following the 1600 pips decline from the year high circa 1.40 posted last May. Is this a bottom or just a pause in the middle of the bearish dominant trend? Honestly, there’s not one straight answer to the question, but there are educated guesses: from a fundamental point of view, the USD is indeed favored against the EUR, due to the well known imbalance between Central Bank’s policies.
Technically the weekly chart suggest it’s just a pause, with momentum still heading lower despite in extreme overbought levels, RSI stuck around 30, and 20 SMA maintaining a strong bearish slope well above current price. Does that mean it will extend the slide? Well, many will depend on how the ECB’s meeting and US Payrolls result next week; but there is still another factor to add to the formula: year end is around the profit, and investors will be more than willing to profit for the books. That means a strong upward corrective movement may be around the corner, as long as 1.2360 holds; and the outcome of the above mentioned events could well be the trigger market needs to do it, triggering an advance up to this month high, a couple pips shy of the 1.2600 figure. If this last is taken, the upward correction could then extend up to 1.2770 price zone, without really harming the long term dominant bearish trend.
But a break below 1.2360 will draw a completely different scenario: greed will likely take over markets, and stops get blew, dragging the pair to an immediate bearish target of 1.2270. If this last gives up, the 1.20 mythical figure comes next.
View Live Chart for EUR/USD
Technically the weekly chart suggest it’s just a pause, with momentum still heading lower despite in extreme overbought levels, RSI stuck around 30, and 20 SMA maintaining a strong bearish slope well above current price. Does that mean it will extend the slide? Well, many will depend on how the ECB’s meeting and US Payrolls result next week; but there is still another factor to add to the formula: year end is around the profit, and investors will be more than willing to profit for the books. That means a strong upward corrective movement may be around the corner, as long as 1.2360 holds; and the outcome of the above mentioned events could well be the trigger market needs to do it, triggering an advance up to this month high, a couple pips shy of the 1.2600 figure. If this last is taken, the upward correction could then extend up to 1.2770 price zone, without really harming the long term dominant bearish trend.
But a break below 1.2360 will draw a completely different scenario: greed will likely take over markets, and stops get blew, dragging the pair to an immediate bearish target of 1.2270. If this last gives up, the 1.20 mythical figure comes next.
View Live Chart for EUR/USD
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