Euro/Dollar (EUR/USD) Technical Analysis - Weekly, 31 week, 2010

It's been a while since our last technical analysis of the Euro/Dollar currency pair. The Euro continued its upward movement supported by the strong oversold conditions of the previous months. Now it trades around 1.298/1.30 where the 61.8 Fibonacci retracement level lays. On the daily graph we see a continuing upward movement of the pair price for the last 2-3 weeks while the indicators continue to make lower highs.

The weekly graph of the Euro/Dollar pair (click on it for a better view) presents an interesting situation. MACD is on positive side while the MAs are still negative. The Stochastic is in overbought area. And the price of the Euro is at the 61.8 Fibonacci level. A fail to penetrate this level could result in another upward movement of the Dollar. The bearish divergence seen on the daily graph supports the idea that the current resistance level would sustain and another fall of the Euro could be on its way. For a clearer view we might look at the monthly graph below.

On the monthly graph we see the major trend is still up for the Dollar and down for the Euro. The Stochastic is signaling an increase of the Euro value which took place during the current month. Still the major trend is not changed and having in mind the weekly and daily graphs another fall of the Euro towards the 1.19/1.20 levels is possible soon.

Euro/Dollar (EUR/USD) Technical Analysis - Weekly, 27 week, 2010

The expected upward movement for the Euro toward the US Dollar took place in previous weeks. While at first the Euro fell to about 1.19 then it advanced quickly to above 1.24 touching the 1.2460/70 area. After that the power of the Euro bulls started to vanish and it lost about 2 cents.
This week starts with an advance of the Euro again and now it trades near 1.24 level again. The weekly graph (click on it for a better view) however hardly supports a lasting increase of the Euro value against the US Dollar.

The Euro went to the MA level and the Stochastic is continuing to climb to the overbought areas. Still however, it is not there so we might witness a test or even a break of the previous high at 1.247 level. The next resistance lays at the 38.2 Fibonacci level which means it would trade around 1.256 Dollars. Still the MAs on the weekly graph are too far from each other and the possibility for another fall of the Euro to around the 1.2/1.19 level is valid.
The trading during the week could be a very volatile one because the Euro/Dollar pair is at marginal levels. Plus the end of the month is near which would form the view on the monthly graph.

The important news from the markets concerning the EUR/USD currency pair in the week ahead are the Consumer Price index in Germany (to be released on Monday), the Money supply levels in EMU zone and UK (due Monday and Tuesday), Personal income and Consumption in USA (to be released on Monday), Consumer confidence in EU and USA, Unemployment rate in Germany (Wednesday) and in EMU and USA (Friday), Gross Domestic Product of UK (Wednesday), Jobless claims in USA (Thursday).

Euro/Dollar (EUR/USD) Technical Analysis - Weekly, 23 week, 2010

Hello. Let's take a look at the possible scenarios for the week ahead concerning the Euro/Dollar trading.

 The weekly graph points to possible bullish divergences for the Euro which could signal the trend reversal is near. The main problem with these divergences however is that they are not finished yet. This could lead to many people getting hurt by expecting a strong upward Euro movement while it still hasn't found a strong enough momentum. A classical case for a bull's trap. This could trigger a wave of stops being hit which presents a big opportunity for a test of the previous lows of the Euro around 1.21.
The daily graph also raises some warning signs which basically consist of the fact that even with positive MACD histogram and being in a relatively oversold position, the Euro is still not able to advance high enough (above 1.25-1.26) and to sustain that level.

With all that said it would be good to keep in mind that the mentioned divergences could get formed in the near future (maybe even next week) and an explosive upward move of the Euro against the US Dollar is highly possible.

Euro/Dollar (EUR/USD) Technical Analysis - Weekly, 22 week, 2010

The Euro/Dollar pair took again the major trend direction this week. After the increase of the Euro for the last week which was partly supported by the weekly and the daily graph, now it's again on the downside. During the weekend the news that a major Spanish bank - the Roman Catholic Church-controlled savings bank CajaSur, was took over by the central bank of Spain hit the Euro and made it fall on two consecutive days. Now it trades around 1.2230/40 against the US Dollar.

The weekly Euro/Dollar graph (click on it for a better view) doesn't show any strong upside support for the Euro. Both MACD and Stochastic are pointing down. Such movement could continue at least till Stochastic shows the Euro is too oversold. The current market sentiment is negative towards the Euro and every news about even potential problems in the EU zone could trigger further selling.
There are market rumors on possible ECB intervention but one shouldn't count on that as such a move is mostly hypothetical. However the more oversold the Euro gets, the higher becomes the possibility of volatile movements and explosive ups and downs. The reasons for such movements could be different and could include a possible intervention - either by decreasing the amount of Euros available on the market or by increasing the amount of Dollars.

Euro/Dollar (EUR/USD) Technical Analysis - Weekly, 21 week, 2010

Click on the graph for a better view.

The glamor of the aid plan adopted by the EU quickly vanished last week and the Euro got to its lowest level against the US Dollar since the start of the current crisis.
Today it broke below the lowest point achieved around the failure of Lehman Brothers almost year and a half ago and currently trades around 1.2270/90 level.
The weekly graph still points downward but there are couple of things that should be considered.
The trading levels got steadily outside the Bollinger bands which usually is a sign of extremely high pressure. Such pressure is often found in the last moments of a particular movement. Moreover it almost trades at the Bollinger bands level on the Monthly graph but it still hasn't surpassed them.
Apart from the above notes the downside pressure for the Euro on the weekly graph still remains.
For a more precise picture the daily graphs should be checked during the week.

Euro/Dollar (EUR/USD) Technical Analysis - Weekly, 20 week, 2010

Click on the graph for a better view.

The news about the aid plan the EU government has agreed upon sent a big relief signal to the markets and the Euro jumped against the Dollar. It covered almost 5 cents of losses and currently trades at around 1.2930/40.
Technically there is a chance for a strong bullish Euro divergence to be formed on the weekly Euro/Dollar graph which could signal the start of another medium-term period of value decrease of the US Dollar.
Currently the Stochastic is pointing upward so this week could be a week of the Euro. Still the MACD is in a negative position so this should also be kept in mind.
If the expected increase of the Euro value takes place the first milestone is around 1.31 (a  level that was already touched today) which is the 23.6% Fibonacci retracement level. The second Euro resistance level after the first one lays around 1.34/35.

EUR/USD Technical Analysis - Weekly, 19 week

The EUR/USD weekly graph for the current week doesn't show much of a lead.
In contrast to the upward movement of US Dollar during the second half of 2008, here we still don't see any clear trend turning divergence to be formed. The two red lines (A and B) shows the bullish divergence for the Euro which was followed by its own upward trend in the beginning of 2009.
What the current graph has is a MACD indicator whose Histogram is getting closer to being positive but the value of the Euro against the US Dollar still falls. This could indicate either an end of the fall or a stronger than expected downtrend for the Euro.
The Stochastic being in neither oversold or overbought area shows the current movements on the weekly graph are not supposed to be extremely strong and supported by a large amount in either of the directions.
With all that said what could be expected for the current week is a graduate continuation of the upward Dollar trend accompanied by many sideway movements. If we are getting closer to the end of the Euro fall a higher volatility could also be expected.

EUR / USD Technical View - Strong support for the Dollar?

On Nov. 17 I wrote an article about the negative correlation between the dollar and the stocks. About 2 weeks later the dollar started its victorious march and the stocks didn't follow. The macro conditions about such a movement were clear. Let's take a look at some graphics now.

The monthly graph shows a clear down path for the Euro. Although the MACD is on a positive side, the Stochastic is strongly pointing down. There is a bearish divergence between the Stochastic and the price. The Moving averages are not so strongly bullish about the Euro. All this could lead to a fall of Euro to around 1.3650-1.37 - a resistance level for the first upside movement of Euro at Aug 2004. This level is also 50% decrease from the last upside movement. This may seem like a bold view but the other graphics seem to support it.

The weekly graph shows the bearish Stochastic divergence (we have higher levels of Euro and lower highs of the Stochastic) even more clearly. The Moving averages still haven't crossed on the downside but there is still more the Stochastic to go. It is close to the oversold level but still not there. The daily graph shows more.

On the daily graph the MACD is strongly negative. The Stochastic is strongly oversold. There could be some retractions to higher levels of Euro but with such a negative MACD the dollar positions seem stronger for now. With the support from the graphs of the higher time-frames, the path seems only one way. Till it gets on or close to the above mentioned levels.