Technical Analysis EURUSD : 2014-08-18

Good afternoon, dear traders. I appreciate the opportunity to provide you once again with the current analytical information on the most liquid financial instruments. One of the key macroeconomic events for today is the release of NAHB Housing Index, the U.S. (16:00, CET). This indicator is published by The National Association of Home Builders (NAHB), and is based on a survey of 900 construction companies. This is a diffusion index, i.e. the values greater than 50% indicate the positive sentiment in the construction sector. Real estate market prospects are determined by consumer confidence and income, and also by investment appeal of the sector. Besides, the increase in mortgage lending allows counting on the US banking system consolidation. The release of USD NAHB is a key event for investors, and may lead to the strengthening (increase in demand) of the American currency, if the actual value outperforms the forecast of 53%. Here we consider the EUR/USD behavior on the daily chart.


The daily volumes of futures and options traded on the Chicago Mercantile Exchange are presented on the chart above. A mark of 210,000 contracts has not been overcome. Moreover, the volume fell to almost 140,000 by Friday. The market expects a new fundamental momentum. You can monitor trading volumes for this currency pair by clicking here.


At the moment the EUR/USD price is drifting inside the triangle: there is a consolidation observed. It makes sense to pay more attention to RSI-Bars (13). In terms of sideways movement the oscillators are those indicators that provide correct leading signals. Currently, we can see that the Relative Strength indicator moves inside the daily and weekly upward trend: there is a bullish divergence. The crossing at 63.73390 would be the final confirmatory signal. Parabolic SAR confirms that a new trend is emerging. Thus, the bullish direction should be considered the most likely at the moment. We note that the daily trend has come to an end: bears lost their power. A pending buy order is to be placed above 1.34117, which is confirmed by Bill Williams fractal. This level intersection will mean leaving the triangle into the green zone. Risks should be limited below 1.33577, which is confirmed by the fractal and Parabolic historical values . Little probable, but possible, that the bearish power will be weakened by strong US macroeconomic statistics. In this case, a pending sell order is to be opened in a symmetric manner: below the support at 1.34117 with risk fixation above 1.33577. You should ensure that RSI-Bars would update its trough below 52.44068.

After position opening, Trailing Stop is to be moved after the ParabolicSAR values, or near the next fractal trough (long position), or peak (short position). Thus, we are changing the probable profit/loss ratio to the breakeven point.

Buy stopabove 1.34117
Stop lossbelow 1.33577

Sell stopbelow 1.33577
Stop lossabove 1.34117


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