EUR/USD Forecast January 29, 2013, Technical Analysis

The EUR/USD pair fell most of the session on Monday, but did bounce towards the end of the day also the 1.34 level in order to form a bit of a hammer. This hammer is just below the substantial 1.35 level of resistance, and as a result will be watched very closely by us. If we can get above the 1.35 level on a daily close, which looks more and more likely, we are willing to not only go along of this pair, but hang on to the trade for quite some time.

If we managed to break the 1.35 level, this would be the breaking of a neckline on a massive inverted head and shoulders. This head and shoulders pattern suggests that we will see a print of 1.50 before it’s all said and done. At this rate, it appears that many of the world’s central banks are looking to devalue their currencies at the same time Europe seems to suggest that they are going to do nothing to expand monetary policy, therefore giving traders the “green light” to start buying Euros hand over fist. While this dynamic is in the market, along with both America and Japan printing currency hand over fist, it suggests to us the this pair will continue to grind higher – perhaps over the long run.

If you look at the longer-term charts for this pair, you will notice that the pair could be considered to be in a massive consolidation rectangle. From a longer-term perspective, but 1.20 level offers quite a bit of support while the 1.50 level offers quite a bit of resistance. With that being said, the 1.35 level is exactly halfway between the two and therefore a bit of “equilibrium” in this market. Because of this, it makes sense that the pair is treating this area as this important.

As long as the Federal Reserve continues to weaken the US dollar, we fully expect that the Euro will continue grinding higher. After all, several members of the ECB have recently suggested that they are comfortable with the fact that the Euro is as strong as it is. Also, in a bit of comedy, Mr.Draghi recently suggested that he believed countries would abide by the agreement not to debase currencies and the last G20 meeting. Because of this, it doesn’t look like the ECB is anywhere near doing monetary policy.

EUR/USD Forecast January 29, 2013, Technical Analysis

Credit : FX Empire Analyst - Christopher Lewis

Trade Idea Wrap-up: EUR/USD – Hold long entered at 1.3410

Candlesticks and Ichimoku Intraday | Written by Action Forex | Jan 28 13 15:42 GMT

EUR/USD – 1.3449

Most recent candlesticks pattern : N/A

Trend : Near term up

Tenkan-Sen level              :1.3451
Kijun-Sen level                 :1.3452
Ichimoku cloud top              :1.3409
Ichimoku cloud bottom          :1.3370

Original strategy : 

Bought at 1.3410, Target: 1.3510, Stop: 1.3420

Position: - Long at 1.3410
Target:  - 1.3510
Stop:- 1.3420

New strategy  :  

Hold long entered at 1.3410, Target: 1.3510, Stop: 1.3420

Position: - Long at 1.3410
Target:  - 1.3510
Stop:- 1.3420

Failure to penetrate Friday’s high of 1.3480 and current retreat suggest consolidation would be seen and intra-day support at 1.3425 needs to hold to retain bullish prospect of another rise, above 1.3480-84 (said resistance and 61.8% projection of 1.3038-1.3404 measuring from 1.3258) would encourage for headway to 1.3500-10 (psychological resistance and 61.8% projection of 1.2998-1.3404 measuring from 1.3258), however, near term overbought condition should prevent sharp move beyond there and risk from there is seen for a correction to take place later.

In view of this, we are holding on to our long position entered at 1.3410. Only below previous resistance at 1.3393-1.3404 would defer and risk correction to the Ichimoku cloud bottom (now at 1.3370), then towards 1.3349 (Friday’s low) before prospect of another rally.