Forex Technical Update
Can Bulls Hold the Line at 1.42?
- The EUR/USD was strong in the previous US session, and then turned weak again over the Asian/European session.
- In Trichet's press conference he held his language on interest rate hike projection, but did mention monetary stimulus. Basically this is a signal for more money supply and therefore a weaker Euro.
- The initial reaction was a sharp slide in the EUR/USD, but the market had buy orders near yesterday's low.
- As the bulls and bears fight it out, 1.42 appears to be the line. If the market can within an hour hold below 1.42, the bears should be in charge. Otherwise, the market is likely to be sideways to slightly bullish.
- The RSI breaking below 40 would also be a bearish signal.
The 1.4150 Line:
-The bearish reaction so far is contained above 1.4150. A breach below this level can signal that this is not just a single reaction, but one that can extend lower towards 1.4050-1.4070 level in the very short-term.
- Then, if the market pushes below 1.40, we can head to 1.3837 low.
The 1.4280-1.4300 Line:
- A break back above 1.43 would suggest a bullish intent towards 1.4350, 1.4450.
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Fan Yang CMT
Chief Technical Strategist