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Long term bias: bullish, but we do not suggest taking new long positions until the pair has gotten above the 1.3216 area. Note that with the FOMC statement coming within a few hours after this writing, the pair is subject to unpredictable volatility, though we do not believe the longer term uptrend for the pair will be affected by this announcement.
The following is based on both our understanding of market fundamentals and the below EURUSD daily chart
EURUSD DAILY CHART 32AUG10
Long term: As long as EU economic data continues to be better than that of the US, it is likely that the pair will remain in its longer term uptrend, with normal retracements like the one we are seeing ahead of the FOMC statement.
What could reverse this uptrend? See our recent article: What Will Reverse The USD Downtrend?
Given the longer term up trend in place, any short EURUSD positions should be closed out unless taken on intraday basis based on a compelling argument based in technical analysis.
Close out ANY multi-day short positions, because:
There are too many potential support points too close together to allow for a low risk entry with enough room for price to drop enough for an adequate profit before the next possible support is hit. These potential support areas include:
1. 20 day moving average (rising yellow line) around 1.3047
2. 38.2% Fibonacci retracement (horizontal yellow line) around 1.2904, labeled “38.2”
3. The rising 50 day moving average (rising red line) around 1.2845
4. The rising up trend line (rising straight red line just below the 50 day moving average
5. The 23.6% Fibonacci retracement (horizontal yellow line) around 1.2550 labeled “23.6”
Note that because these support lines become resistance once they are penetrated, we do not recommend taking new long positions while the pair remains below the 200 day moving average (purple line at around 1.3186).
NB: Short Term the pair has crossed back below its 200 day moving average (purple line at around 1.3186), a bearish sign, therefore:
We DO NOT recommend taking long positions until the pair gets above 1.3216, which takes it above BOTH of the following resistance points:
- This 200 day moving average (purple line at around 1.3186), AND
- The 50% Fibonacci retracement (horizontal yellow line around 1.3214 labeled 50.0)
Therefore: Our Suggested Trading Plan go to www.fxmarketanalysis.wordpress.com
DISCLOSURE: NO POSITIONS