EURUSD Technical Analysis/Price Action Update – WC 22nd October
by Nick Simpson, Forex fx4x
- Our EURUSD analysis post last week highlighted a bullish engulfing candle off the 200 period daily SMA at 1.2820. Price has subsequently moved over 180 pips higher after breaking above the candle high and then the 1.30 handle.
- Resistance around 1.3130 capped the EURUSD rally on Thursday then gave an inside day at this previous resistance level and swing high. It is worth noting that the dollar index was trading into strong previous support as EURUSD hit this resistance level.
- Friday has seen a break of the inside day, to the downside, on the back of reduced market appetite for risk and a stronger dollar against the euro and the yen (amongst other currencies). Friday was the 25th anniversary of Black Monday and came after a below par earning’s week in the US. This strong dollar scenario had gold dropping to a six-week low around $1715 and the price of oil down to around $90.09 (a $2 drop).
- The US 10 year treasury yield has fallen 6 basis points to 1.77% as the market moved to a perceived safe haven (yields and price move inversely).
EURUSD Daily Chart
Click on graph for larger image.
- On the back of the above, the EURUSD currency pair has dropped as low as 1.3012 on Friday but found interim technical support at the ascending trend line as per the daily euro/dollar chart above.
- The EURUSD price action has only closed the week 70 pips higher than the open but has managed to close above the key 1.30 level; EURUSD closed 0.33% lower on Friday following the broad based move to the dollar.
- In related markets the US dollar index has closed almost flat on the week after experiencing gains on Thursday and Friday. Cable has closed the week just under the 1.600 round number (see this GBPUSD technical analysis video update).
- Any sustained downside, on a move through 1.3000, could hit the previous support level around 1.2820; the daily and weekly charts below show that this has been strong support over recent trading. Further to this, the 1.2750 level has a confluence of 38.2% Fibonacci retrace and previous structure highs (see weekly chart below). A resumption of the upside move could see another attempt on this weeks high at 1.3138; further to this is the 1.3167 major swing high.
EURUSD Weekly Chart
Click on graph for larger image.
Related Posts at Forex-FX-4X
- AUDUSD – Forex Weekly Analysis 22nd 26th October
- Dollar Index Technical Update – Week of 22nd 26th October
- GBPUSD Technical Update Video – 19th October 2012
- GBPUSD Technical Analysis Video Update – For 18th October 2012
- Dollar Index Analysis – 17th October
Related Articles at Global Economic Intersection
- Other Investing and Precious Metals articles by Nick Simpson
