As it stands, the EURUSD has has only had a total of 4 days above the 20EMA on the daily chart with a few extra wick piercings, but that is it for the pair.Â Â We have been talking about this for the last week and the technical outlook does not get any better for the pair.Â Since the 20EMA continues to decline, it further hampers the pairs ability to make any fresh upside.Â Â Lets however dive into some of the other elements in the daily chart which suggest upside rallies will likely fail
Taking a look at the chart below, we would like to point out several technical situations that hint the EURUSD is in for further losses.Â First, note the Momentum and CCI oscillators.Â Starting with the Momentum, even though there is some divergence, the angle is really flat and has not been able to pierce the zero line with the actual momentum line being somewhat jagged.Â This suggests that any upside pressure that is building is not strong, smooth or consistent and more of a non-convincing nature.Â This is completely contrary to the previous down move from late December whic was a steady, sharp and smooth line.Â This speaks to the force and consistency of the selling and is a much better momentum model to move the pair in the direction with the aforementioned characteristics (sharp, steady, smooth).
Furthermore, look at the 20 CCI which has been in the negative territory for the last 32 candles or so and pretty much negative (save one day) for the entire year.Â When the CCI has more than 6 consecutive bars negative, it generally means the trend is down.Â Couple that with two readings almost hitting 100 and the force is with the bears.Â Thus the twin oscillator pressure of the Momentum and CCI suggest upside rallies will not have much gusto to them.
Lastly, the cloud/kumo configuration starting today on gets thicker and lowers day by day as time goes on.Â As it stands, there is a flipping of the cloud which means that this temporary thin-ness (2days at best) will provide little resistance should the pair challenge it.Â However, since that is over 800 pips away, we feel this scenario to be more akin to the Chicago Cubs winning the World Series next year while losing half their stars (sorry Cubs fans.Â I am from Chicago myself and wish they’d win one, but history has not been on our side).
That being said, we anticipate 1.3000 to repel any upside skirmishes and that if the pair should break and close above the daily 20EMA, 1.3500 will likely be the next upside target and a great rally point to sell the pair.Â Â Since the pair broke the 4 month trendline last week, it has rallied a tad but hit our first downside target of 1.2500.Â A daily close below 1.2500 brings on the 2008 low in the bottom of the 1.23 handle.