Technical Analysis For EURUSD: 26th September -30th September

Sep. 26, 2016 12:04 PM ET
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Contributor Since 2016

I operate in the forex for three years

The medium-term uptrend is still intact in the EURUSD pair. Lots of chaos has been prevailing in the market from the very beginning of the year 2016 which has been furthermore intensified in the month of September. The FED decided not to hike the interest rate currently which has given a sign of ease to EURO investor. Though there has been a slight indication for the rate hike in the month of December but researchers are assuming a strong bullish rally in the upward direction till the month of December. This scenario might even threaten the long-term bearish trend of this pair. Though the weakness of Dollar is clearly established in the forex market but investors are in fear due to the prevailing weakness of the EURO. The major news release of the US and European economy was pretty bad in this month which mitigated the weakness of the dollar to a great extent. The upcoming week starts with the German IFO Business Climate data which is most likely to come green. Followed by the dovish FOMC meeting a green data in the European economy will definitely fuel the price higher in the EURUSD pair.

Daily chart analysis

Figure: Technical parameter in the EURUSD pair

The daily Fibonacci retracement level drawn from the low of 5th January 2016 to the high of 2nd may 2016 is showing the most prominent level in the EURUSD pair. Thought the 61.8% Fibonacci retracement level was thoroughly breached during the Brexit news but the pair eventually overcomes the loss by trading the above the 61.8% Fibonacci retracement level. Currently, the 61.8% Fibonacci level in the daily uptrend is situated at the 1.10730 level. This area has been market by the investors as golden buying zone since the medium term uptrend line also coincides with this level. Currently, the price is trading above the 60% retracement level. The 50% retracement level is situated at 1.1170 level. Professional price action traders are looking for price action confirmation signal near the 1.1170 level to enter long in this pair. However, if the pair manages to breach this level then the next stop for this pair would be the 1.1070 level. A clear decisive break of that level will bring a strong downward rally in the pair towards the low of 5th January 2016.The pair is most likely to find a significant amount of support in that level .Falling to hold that level will end the medium term uptrend of this pair and will initiate the long term bearish momentum of this pair. On the contrary, fresh buying pressure from the reign 50% and 61.8% retracement level will initially target the 38.2% retracement level. A daily closing above that level will target the critical resistance at 1.14269.A clear break of that level will bring a strong rally in the EURSD pair towards the high of 2nd may 2016, 1.1625 region. If the market manages to breach that level then we can assume that the long term bearish momentum of this pair has come to an end and the market is ready to rally upward towards the 1.2000 level market.

Weekly chart analysis for the EURUSD pair

Figure: Weekly chart analysis for the EURUSD pair

The weekly chart is clearly neutral at this moment. Price has formed a nice triangle chart pattern in the weekly chart. Currently the triangle resistance is at 1.1270 level and the support is at 1.1090 level. To be precise traders have a very narrow place to trade this pair since the price has been squeezed up by the triangle support and resistance level. Professional traders are waiting a clear break of that level to enter in the market. A clear bullish break of the 1.1270 resistance level will lead the pair towards the critical resistance zone 1.14566 level. On the contrary a decisive break of the channel support level at 1.1090 level will result in a huge drop of the price towards the 1.0000 level. The recent upcoming FOMC meeting minute was pretty much dovish which has given the EURO investors some hope. But trading this pair at the current price level would be an immature act since the price is neither in the support or resistance level. The triangle pattern in the weekly chart is almost complete and the market is ready to breakout from its confined region. Though the overall long term trend in the EURUSD pair is strongly bearish but there is good possibility of bullish break out in the price. So before selling this pair, extreme measure should be followed.

Summary: The long daily uptrend in the EURUSD pair is still intact and professional traders are waiting eagerly for the clear break of the triangle chart pattern in the weekly chart. Trading this pair at the current price level will be an immature act since price is in the ranging move and getting ready to breakout from its confined region. Considering the fundamental analysis the EUR is still ahead of the US dollar since the FOMC meeting minutes Cleary indicated that before the month of December there would be no hike in their interest rate. On the contrary the Euro is doing pretty well considered to its major rivals in the recent days. Aggressive traders should use the price action confirmation signal to but the major support of this pair. The conservative traders should wait patiently for the clear bullish break of the 1.1270 level. Considering all the technical and fundamental parameters the EURUSD pair is still in the bullish mode and ready to break the high of 2nd may 2016.

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