EUR/USD (daily chart as of April 25, 2014) tested the
support of the daily EMA 50 on April 21, 22, and 24 (green arrow on chart).
Price then once again breaks out above 1.3820 to test the short-term downtrend
line 3. Note that 1.3820 is an important level to watch. It has been acting as
key resistance since October 2013 (red arrows on chart).
Note also that there were several spikes that overshot
1.3820 (gray shadows on chart) in the past four months. The first one occurred
on December 27 in 2013 with a shooting star candlestick pattern that had a very
long upper shadow attached to a rather small real body. Price then tumbled
until it found support at the daily EMA 200.
The second spike occurred from March 6 to 19. Price hovered
over 1.3820 for about two weeks before finally breaking down below it on March
20. The third one was from March 24 and 25, followed by a decline that stopped
right below the daily EMA 100. The fourth spike occurred from April 9 to 17,
and it appears that another one is in the making right now, if price is unable
to break above line 3 and fails to hold 1.3820 again.
The currency pair is still trading in a large rising wedge
between two trend lines (line 1 and line 2), which is a potential bearish
pattern after an uptrend move. Trend line 2 overlaps with the daily EMA 200
(bold green moving average line), which makes the support more significant.
Within the large rising wedge, the pair is also trading in a small triangle
range between two short-term trend lines (line 3 and line 4).
Support levels below:
1st support: daily EMA 50
2nd support: daily EMA 100
3rd support: line 4, line 2 or daily EMA 200
Resistance levels above:
1st resistance: line 3
2nd resistance: 1.3905 (April 11 high)
3rd resistance: 1.3966 (March 13 high)
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