Forex Technical Update
The EUR/USD has been very bearish this week. The market put on USD-strength across the board after the FOMC meeting minutes. The ECB Interest rate meeting and the following press conference with Draghi did not accelerate the decline other than the immediate reactions. On the other hand, it is still too early to call any correction as far as price action goes. As far as momentum and volatility, the market is oversold. The 1H RSI is below 30, and the market is tagging the lower bollinger band (3 standard deviations from the 200 simple moving average). With the ECB risk event over, the next big one is the Non-Farm Payroll on Friday. A pullback from 1.31 perhaps?
The 4H chart shows the market falling sharply from the double top below 1.3380 as well as some fibonacci retracement levels if the current low at 1.3103 holds for a pullback. There are a few resistance areas to monitor. The 1.3210, 38.2% retracement can act as resistance especially if the market continues to trend sharply. But considering the NFP ahead, the market might retrace a bit higher to 1.3240-50 area, containing the 50% retracement, a previous support pivot and the 200 SMA in the 4H chart. The bearish outlook still remains unless the market pushes above 61.8% retracement and also an apparent support pivot at 1.3275, and then above 1.33, so stop placement might have to be generous.
Meanwhile, the outlook for the bearish outlook is toward the 1.2970-1.30 support area. So if there is an entry or average entry at 1.3250, with a stop at 1.3320. The reward to risk is about 250:70, or 3.57:1
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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