Technical Analysis January 9th: Euro is Retracing
EURUSD, Daily timeframe
Bias: Pair in Uptrend
On Monday, the euro continued to drop another 58 pips against its dollar counterpart. Clearly the most traded pair in the world respected the immediate resistance at 1.2065. As you know, the pair is in an Uptrend so our strategy is to look for levels of confluence to potentially go long with the trend. The developments we’re monitoring are:
Now, price action is quite close to the support at 1.1900 so we’re yet to see whether there will be a reaction from that level or not. The reaction that we’re looking for is a daily rejection candle that could be potentially a trigger signal. Targets above are 1.2065, 1.2100 and 1.2150.
If the pair closes the day below the above discussed support, then it could continue to retrace further. Next support area is located at 1.1700 (another level for doing business if rejected by bullish candle daily formation).
A substantial drop that breaks support levels and closes below 1.1700 would probably trigger more short-term bearishness. The farther out support is 1.1500. Traders have to be patient and possibly not attempt counter trend trades.
Gold seems to be taking a break from the aggressive bullishness of the past few weeks. This is not a bad sign, though. It could just mean that the precious metal has cooled off for a while before re-initiating activity.
We could see a brief retracement to the immediate support at 1300.00. That could potentially offer a spot to go long, only if of course a bullish rejection pattern of the level presents itself. Targets above are 1350.00 and 1400.00.
Price could start to consolidate for a while. This means that we’d have to await for a proper market catalyst to ignite market reaction from the asset. It has to be noted that gold responds to major news concerning the U.S. dollar and geopolitical events in the world generally. This is due to its safe haven status.
A fall and closure below 1300.00 could bring more bearishness as the level is pivotal. It’s also very useful to keep an eye on the weekly timeframe especially for long-term positioning. Larger timeframes clear out the noise of the market and provide substantial clarity of direction.
Bias: ranging, 4-Hour timeframe
The digital currency pulled back from the immediate resistance at 15, 500. The level has been a barrier at least three times before (note that we’ve mapped out levels and potential technical developments on the 4-hour timeframe). The scenarios of interest are:
The digital currency could proceed to test the support at 13,000. Provided there is a solid signal from that level we could position ourselves for a long. By solid we mean: either a bullish 4-hour rejection candle of at least 100 pips, or a bullish continuation pattern which confirms the directional move. Target is 15, 500
Upon good news, the cryptocurrency could breakout above the 15, 500 resistance level. Immediate target is the record high that was reached on December 18th, 2017. If that peak is overcome by price, we could see further advancement of price.
If price falls below the recent support at 13, 300, this could mean price going for the pivotal support area at 11, 300. Now, that level is pivotal because if Bitcoin drops below it, it could be all downhill from there. No longs to be attempted. Bias would heavily be tilted to the bearish side.
Bias: Bullish, 4-Hour timeframe
There was little change on Monday in the price of Ether. We might have a short –term resistance level formed by the fresh peak at $1181. Price could be affected by other currencies being dragged by news around tightening regulation around digital currencies. We’re yet to see whether the effect will take place across all representatives of the cryptocurrencies or not. We’re monitoring the following scenarios:
Price counties its bullish journey and doesn’t revert to test previous levels. Targets above are 1200, 1250 and 1300.
The digital currency could go for a retest of previous levels which could give traders opportunities to go with the trend from lower levels. Immediate first support is located at 995, next one is 860, then 740, 600 and then the farthest 500.
All these could offer places for going long only provided one of them is being rejected by a 4-hour bullish candle showing considerable bullishness and strength.
A plunge below the distant 500 level could have a massive snowballing effect with more traders going short. In this development there should be no long trades initiated as bias would weigh to the bearish side.
Wishing you happy and successful trading!
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