Following the partial resolution of the issues surrounding the so called “fiscal cliff”, markets have finally move out of their extended consolidation phases which saw many of them trade in a sideways pattern in the run up to Christmas, and the euro dollar was no
exception. The technical picture for the eurodollar on the daily chart is now dominated by one level, namely the 1.3300 price point and since early December we have seen 3 consecutive failures at this level. The first two were clearly signaled by isolated pivot highs
and a subsequent pullback as a result, and the most recent was in yesterday’s price action which saw the pair touch this level once again before closing below the 1.32 price point.
exception. The technical picture for the eurodollar on the daily chart is now dominated by one level, namely the 1.3300 price point and since early December we have seen 3 consecutive failures at this level. The first two were clearly signaled by isolated pivot highs
and a subsequent pullback as a result, and the most recent was in yesterday’s price action which saw the pair touch this level once again before closing below the 1.32 price point.
EUR/USD Analysis – January 3, 2013
This negative sentiment towards the eurodollar has continued in today’s early trading with the pair now testing the 1.3111 area at time of writing where a possible interim platform of support awaits.
The daily trend for the euro dollar remains bullish although the trend dots on the chart have flattened significantly and yesterday’s price action was accompanied by moderate selling volume, but not sufficiently high enough to suggest that this is a major reversal, but more likely a temporary pullback. Indeed, volumes today appear to be light, once again, adding further weight to this analysis.
For a medium term picture of the euro dollar the weekly chart provides some interesting clues. First the trend here remains firmly bullish and is still rising, having gained momentum from the isolated pivot low of late October and, in addition, the trend is also gaining traction from the breakout above the isolated pivot highs of August and September 2012.
Recent volumes have remained above average and bullish with only a slowdown due to the Christmas holiday period. The heatmap also remains firmly bullish and provided we see a break beyond the 1.33 level there is no reason to suppose that the eurodollar will not continue to remain strong in the short term with the next target a test of the 1.35 area in due course.
Credit : By Anna Coulling
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