EUR/USD (daily chart as of May 27, 2014) traded below a medium-term
uptrend line (line 2 on chart) on May 21, and below the 200-day EMA on
May 22. Yesterday, price rebounded to the 1.3670 level (last significant
low point of prior uptrend) and managed to close right at the 200-day
EMA.
It appears that price has broken down below the lower border of the large rising wedge between two rising trend lines (line 1 and line 2). Technically, a rising wedge after an uptrend move is a potential bearish pattern, mentioned in our previous analysis.
The pair is now testing the 200-day EMA, which has been serving as major support since July 2013. If price is unable to hold it, the current uptrend could end, followed potentially by a trading range or downtrend move.
The ECB’s next policy meeting is scheduled for June 5. The policy makers are expected to cut interest rates to boost the economy and avoid deflation. ECB President Draghi has mentioned possible negative rates, liquidity injections, and large-scale asset purchases.
Support levels below:
1st support: 1.3560 (February 12 low)
2nd support: 1.3475 (February 2 low)
3rd support: 1.3400 (November 21, 2013 low)
Resistance levels above:
1st resistance: 200-day EMA or 1.3670
2nd resistance: uptrend resistance line 2
3rd resistance: 1.3775 (May 12 high)
It appears that price has broken down below the lower border of the large rising wedge between two rising trend lines (line 1 and line 2). Technically, a rising wedge after an uptrend move is a potential bearish pattern, mentioned in our previous analysis.
The pair is now testing the 200-day EMA, which has been serving as major support since July 2013. If price is unable to hold it, the current uptrend could end, followed potentially by a trading range or downtrend move.
The ECB’s next policy meeting is scheduled for June 5. The policy makers are expected to cut interest rates to boost the economy and avoid deflation. ECB President Draghi has mentioned possible negative rates, liquidity injections, and large-scale asset purchases.
Support levels below:
1st support: 1.3560 (February 12 low)
2nd support: 1.3475 (February 2 low)
3rd support: 1.3400 (November 21, 2013 low)
Resistance levels above:
1st resistance: 200-day EMA or 1.3670
2nd resistance: uptrend resistance line 2
3rd resistance: 1.3775 (May 12 high)
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