Technical Analysis EURUSD : 2014-08-11

Hello, dear traders. Today we are going to analyze the Euro against the US dollar forex pair. As we can see at the price chart the currency pair is in a down trend as indicated by the falling trend line. The weekly rising trend line has been well before breached to the downside signifying that upside had come to an end. Moreover, the SMAs are above the prices adding to the negative pressure. However, the currency pair stopped at long term support level at 1.3333 which is the lowest since November 2013. Pressure to the downside is likely to persist according to the price pattern but we would not expect the strong support to give up easily.

Furthermore, at the below chart we can see the daily volumes of futures and options traded on the Chicago Mercantile Exchange. We can see that on the last trading sessions the volume is high and that provides validity to the last bullish candle. Also, at the latest Market Sentiment covering the week up to 4th of August we can see that the Euro Net Bearish position is at 2-year extreme levels suggesting a turning point is imminent.


Looking at the oscillators, Stochastic is rising suggesting that prices may react positively in the intraday. The OsMA is also gradually advancing and the RSI (14) provides an interesting sign, a bullish divergence. The latter indicates bears are weak and likely do not have the power to drive prices lower. In our opinion, combining the volume of trading with extreme bearish market sentiment, strong support and the bullish divergence we come to the conclusion that chances favor a corrective upside reaction. The retracement could move initially to resistance at 1.3507.

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