EUR Technical Analysis

H4 price broke 200 SMA to below for the breakdown of the price movement to the primary bearish reversal. The price is breaking 1.4498 support level to below for the 1.4390 bearish target.

Daily price is on breakout to be crossed the border of Ichimoku cloud for the ranging market condition with the good bullish reversal possibility. if the price breaks 1.4906 resistance level to above on close daily bar so the bullish reversal will be started, otherwise - ranging market condition wiating for direction.

The Euro may be preparing to turn lower against the British Pound as the appearance of a Shooting Star candlestick hints at ebbing upside momentum. A reversal could ultimately lead to the formation of a double top below the 0.88 figure.

Near-term supportis in the 0.8582-0.8607 area (trend line, 23.6% Fibonacci expansion), with a break below that on a daily closing basis exposing the 14.6% level at 0.8503. Alternatively, a push above the 0.8725-77 zone (August 16 high, 38.2% Fib) opens the door for a test of the 50% expansion at 0.8914.


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In our last article, we looked at EUR/JPY after the pair ran down to support after the September BoJ meeting. And as we wrote, this confluent zone of support had already seen multiple tests in the months leading up to that meeting, raising the possibility of a bigger-picture or longer-term reversal after the pair spent the better part of the previous 13-months in a vigorous downward-sloping channel.

It’s the price action after the Brexit referendum that should be really compelling to EUR/JPY traders. Drawing a Fibonacci retracement on the Brexit range (high/low of June 24th) brings on a series of levels that have seen a considerable number of support/resistance inflections. Of relevance to near-term price action is the 23.6% retracement of that move at 112.25, which is confluent with another, longer-term Fibonacci level at 112.02, which is the 23.6% retracement of the ‘Financial Collapse move’ in EUR/JPY, taking the 2008 high to the 2012 low. But perhaps more relevant is the fact that this support has held the lows in EUR/JPY since mid-July after numerous tests of this zone.
As we looked at in our last article, this continued support can open the door to top-side plays. The targets in our last article were at 114.30, and traders can also incorporate the potential resistance zone at 115.00-115.37. Should rising prices take out the 115.37 level of resistance, the legitimate possibility exists of an extension of the move towards deeper resistance at 117.50, 119 and then 119.90, just shy of the next ‘big’ psychological level at 120.00.

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The Euro is showing early signs of topping once again after rising to the highest level in five years against the British Pound. A Shooting Star candlestick hints indecision after a five-day winning streak and developing negative RSI divergence points to ebbing upside momentum.

A reversal below support in the 0.8725-77 area (August 16 high, 38.2% Fibonacci expansion) opens the door for a challenge of a rising trend line at 0.8674. Alternatively, a push above the 50% level at 0.8914 paves the way for a test of the 61.8% Fib at 0.9050.
The Shooting Star candle is not an actionable reversal signal without further confirmation even with support from RSI divergence. Similar false starts have been common on the way up from early-September lows and waiting for a clear-cut reversal on a breach of trend line support seems like the prudent thing to do.

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The Fibonacci retracement of the ‘Brexit move’ in EUR/JPY has continued to provide usable levels to traders; with the 23.6% retracement helping to set prior support at 112.25, and the 38.2% retracement of the same move showing both prior support and resistance around 114.11. With the most recent pullback finding another iteration of support off of this level, traders can use this zone to stage top-side plays in the pair. Also of key interest for this support is the trend-line that we discussed in our last article. That prior down-ward sloping trend-line of resistance is showing up as near-term support (shown below in red). This can further help traders demarcate risk levels for top-side plays.

For targets on top-side plays, traders would likely want to note the level of 116.00, as the most recent swing-high reversed just above this level. After that, the price of 117.12 becomes interesting as this was the 61.8% retracement of that same Fibonacci move mentioned earlier; and after that we have the July swing-high around the 118-handle. And if that’s able to be met in short order, another ‘big’ level of interest sits at 119.90, as this is just 10 pips shy of the next ‘big’ psychological level, as well being the 61.8% retracement of the run in EUR/JPY from the year 2000 to 2008.

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Price action in EUR/JPY is showing resistance at a prior level of support that also happens to be the 38.2% Fibonacci retracement of the ‘Brexit range’ in the pair. And while this is a bearish observation, it can carry bullish connotations very quickly should price action break above this resistance to highlight continuation potential. At 114.50 is the prior swing-high in the pair, and if price action can take out this level, then traders can get a bit of additional confirmation on the prospect of top-side continuation.

Should price action show the ability to throttle through this prior swing-high, traders can look for support in the vicinity of current resistance, around the 38.2% Fibonacci retracement of the ‘Brexit move’ in the pair, in the effort of trading top-side continuation in EUR/JPY.

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In our last article, we looked at the potential for a new higher-low in EUR/JPY after the European Central Bank extended QE. After this announcement, the Euro was offered-hard across-the-board, but as we noted, the ‘bigger picture’ trend in EUR/JPY has been quite bullish, and traders would likely want to use that short-term weakness to position-in to longer-term bullish strategies.

The level that we pointed out around 120.85 had helped to set support after that ECB-inspired move-lower; after which EUR/JPY ran-up to set a new short-term swing-high at 124.09.

So – to put this in scope – after the European Central Bank extended their QE program, creating weakness in the Euro against most currencies, EUR/JPY merely set a higher-low which then led-in to another higher-high just a week later. This is indicative of a market being driven by a ‘bigger theme,’ and that’s the prospect of continued Yen-weakness as we move into 2017. This is also something that can make top-side continuation, particularly on a longer-term basis, quite attractive.

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The Euro is enjoying the longest winning streak in two months against the British Pound but prices continue to struggle break free for a now-familiar range. A break of rising trend support in mid-November continues to suggest that the dominant trend bias favors weakness.

From here, a daily close above the 23.6% Fibonacci retracement at 0.8533 opens the door for a test of the 0.8642-73 area (trend line, 38.2% level). Alternatively, a turn back below the 14% Fib at 0.8446 paves the way for another challenge of the 23.6% Fib expansion at 0.8344.

An actionable trade setup is not readily apparent at this point. The absence of a clearly defined bearish reversal signal argues against fading recent strength while prices are too close to justify a tactical long position from a risk/reward perspective. On balance, opting for the sidelines seems most prudent.

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The EUR/GBP is declining for the third consecutive session this week, as the British Pound continues to rally against most of the FX Majors. With today’s decline forging new weekly lows, traders will next look to tomorrows UK GDP data to see if this trend will continue. Expectations for Friday’s event are set at 2.1%. If this event comes in better than expected, the EUR/GBP may be set to challenge the standing 2017 low found at .8450.

Technically, the EUR/GBP remains in a short term downtrend. The pair has already declined as much as 324 pips from the standing 2017 high at .8852. Traders may note that the pair has traded below its 10 day EMA (Exponential Moving Average) for the last 8 sessions. This indicator is currently found at .8610, and may be considered a short term point of resistance. Traders should also note that the pair is now testing its 50 day MVA (Simple Moving Average) at .8524. This value is currently acting as support, and a breakout below this average would suggest that the pair may continue to slide lower.

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