The EURUSD made another volatile but indecisive movement this week, simply suggests a consolidation phase where buyers and sellers were fighting and no winner so far. Now let’s take a broader look on my daily chart below. Price is still moving in a big bullish channel (blue channel) since the bullish run from 1.1875 a year ago. The bullish momentum was stopped at 1.4939 last month, making a minor bearish channel (red channel), suggests a bearish correction phase, testing 1.4000 strong/psychological support. As long as the bullish channel holds, the major bullish scenario from 1.1875 should remain intact. However, I don’t think that buying the Euro is a good thing to do, at least for a few weeks ahead especially for intraday traders, which should give more attention to the bearish phase which is happening right now and can only be stopped by a break above the bearish channel, resuming the major bullish scenario. Indecisive movement in the last two weeks is completing the triangle formation inside the bearish channel since the rejection to move below 1.4000, makes trading a little harder with the absence of consistent momentum and direction. I still prefer a bearish intraday scenario at this phase and there are still more rooms for further bearish correction testing the lower line of the bullish channel which could be located around the 38.2% Fibonacci retracement of 1.1875 – 1.4939 around 1.3800 region but would need a clear break below 1.4000 strong support area. For long term trading plan, buying the Euro is acceptable only around 1.3800 due to a good risk – reward ratio there. As long as price stays below 1.4320/40 my intraday bias remains strongly to the downside testing 1.4000 and 1.3800 region.
On fundamental point of view, the global economy recovery and Greek issues have been brought back to the surface. Overall, market sentiment and reaction to these issues gives more advantage to the Greenback and supporting the current technical bearish phase, but also potentially adding the complexity as market sentiment could easily changed without any warning.
Have a great weekend and see you guys next week.
©2011 FX Instructor Forex Blog - For Traders, By Traders. All Rights Reserved.