Hello everyone ……
If you read my EURUSD forecast of 2014, you can easily notice that the pair is now trading at a strong demand zone (1.3400/1.3105) levels ………
At the moment , the pair is around 1.3350 levels , resistance comes at the 1.3424/1.3444 levels on the daily time frame , sustained trading above this level on a daily basis will bring strong recovery towards the 1.3700 levels………..
On the weekly time frame , resistance comes at the 1.3700 levels , break of 1.3700 on a weekly basis will confirm rebound from the 1.3105/1.3400 levels , If seen , a higher leg above the 1.4000 levels couldn’t be ruled out towards the 1.4400 levels……
On the downside , to confirm reversal from the 1.3993 levels , sustained trading on a weekly basis below the 1.3105 levels is needed , If seen , next support would be 1.2500 levels ahead of the 1.2000 levels……
According to the monthly chart posted below , the pair has declined almost 650 pips the last 3 months , but according to momentum indicators (%R), the pair has declined with no momentum , the idea bears are running out gas…..at this point we have 2 options :
1- The pair might retest the 1.3700/1.4000 levels to get the necessary momentum to fall towards the 1.3000 levels…
2- This last fall could be false , the pair has declined towards the 1.3105/1.3400 levels to get the necessary momentum to make a higher leg above the 1.4000 levels….
Finally , RSI also supports %(R) Williams strongly , according to RSI , the pair has printed support at the 1.1875 levels (Jun 2010 low) , since then , RSI has not reached oversold level yet , so as long as 1.1875 holds on a monthly closing basis , the pair is likely to reach the 1.5000 levels…….
Conclusion : EURUSD could dip towards the 1.3200 levels before flying towards the 1.3700/1.4000 levels….
Recommendations for position traders : Buying the pair below the 1.3400 levels targeting the 1.3700 levels ahead of the 1.4000 levels , and you could add 3rd target around 1.4400 levels …
Alternative Scenario : Selling the pair below 1.3105 levels (weekly closing basis ) targeting the 1.2500 levels ahead of the 1.2000 levels…..
