EUR/USD (daily chart as of April 14, 2014) retreated from the 1.3900
level after breaking out above the daily EMA 50 again last week. The
surge started right from the daily EMA 100 and also broke out above the
short-term downtrend line (line 3 on chart), negating our previous
short-term bearish outlook.
Price is now testing 1.3820, the last significant high point of the prior downtrend that started from March 13 (line 3). Note that 1.3820 is also an important resistance level (arrows on chart) since October 2013. If price can hold 1.3820 and the daily EMA 50, more upside movement should be expected.
Note also that the 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. The daily EMA 200 (bold green moving average on chart) also overlaps with trend line 2, which makes the support more significant.
If price is unable to hold 1.3820 or the daily EMA 50, the recent breakout of the short-term downtrend would be considered a false break. It occurred before in early March (red shadow on chart). Price broke out above 1.3820 on March 6, hovering over it for two weeks or so before finally breaking down below 1.3820 on March 20.
ECB President Draghi mentioned on the weekend that more monetary stimulus might be needed if there is further appreciation in the euro. In addition, escalated geopolitical tensions in Ukraine may also drive demand for safe-haven currencies, such as the dollar, the yen, and the franc.
Support levels below:
1st support: daily EMA 50
2nd support: daily EMA 100
3rd support: line 2 or daily EMA 200
Resistance levels above:
1st resistance: 1.3900 (multiple highs)
2nd resistance: 1.3966 (March 13 high)
3rd resistance: resistance trend line 1
Price is now testing 1.3820, the last significant high point of the prior downtrend that started from March 13 (line 3). Note that 1.3820 is also an important resistance level (arrows on chart) since October 2013. If price can hold 1.3820 and the daily EMA 50, more upside movement should be expected.
Note also that the 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. The daily EMA 200 (bold green moving average on chart) also overlaps with trend line 2, which makes the support more significant.
If price is unable to hold 1.3820 or the daily EMA 50, the recent breakout of the short-term downtrend would be considered a false break. It occurred before in early March (red shadow on chart). Price broke out above 1.3820 on March 6, hovering over it for two weeks or so before finally breaking down below 1.3820 on March 20.
ECB President Draghi mentioned on the weekend that more monetary stimulus might be needed if there is further appreciation in the euro. In addition, escalated geopolitical tensions in Ukraine may also drive demand for safe-haven currencies, such as the dollar, the yen, and the franc.
Support levels below:
1st support: daily EMA 50
2nd support: daily EMA 100
3rd support: line 2 or daily EMA 200
Resistance levels above:
1st resistance: 1.3900 (multiple highs)
2nd resistance: 1.3966 (March 13 high)
3rd resistance: resistance trend line 1
No comments:
Post a Comment