EUR/USD: Last month I gave a longer term view and did not use the daily chart above. Two months prior gave a review of the daily chart and it ran something like this
…the action on the 30th was a KR Down…yet this time it has seemingly failed. This doesn’t mean we are heading back up…all the MAs still point lower, etc…but it does seem to indicate that the move lower has halted and we may be in the process of pulling back up a bit.
That is just what we did. We formed a base around the 2003 low at 1.0331 with a double/triple bottom and we went from there higher. Initially we held back from two consecutive closes over the recent 50% Fib at 1.0606 but by mid Jan that had been overcome. We had actually started to form a bullish channel that you can clearly see above with the current support at 1.0679 and the resistance at 1.0894, we are around the middle of it and are currently testing on a closing basis the resistance provided by the Medium MA (currently 1.0783).
On the weekly chart we actually have a key reversal up with the new high for 2017 this past week whilst on the monthly chart we have a bullish matching pattern. So where now? Well if we managed to overcome the Medium MA then the next resistance will be the Nov 2016 – Jan 2017 50% Fib at 1.0819.
After that, we have the Dec 2016 high at 1.0872, that one is awfully close at the moment to the upper channel line and so I’m reserving judgement on that one at this time, though not enough that I do not put a mildly bullish bullet point above. Beyond 1.0872 is the rapidly decreasing Long MA (currently 1.0990), that is a real test.
On the downside, we have support at 1.0706, 1.0668 just below the lower channel and at the moment, effectively combined. If we have two consecutive closes below that level then support is at 1.0587, 1.0577, 1.0543 and the most probable target on any downside move – 1.0452. After that we are back to sub 1.0400 and testing the 2003 low previously mentioned.
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