EURUSD Forex/FX Analysis 19th November – Weekly Technical Report
EUR/USD technical analysis overview. The 1.2800 area previous support lows, which are aligned with the 200 SMA (simple moving average), capped the EUR/USD upside on Friday. Our last update noted that this was ”an area which could prove troublesome for EUR/USD bulls” and this turned out to be the case, during late week trading.
The 4-hour time frame chart (see figure 1 below) shows how price peaked around the 1.2800 area, during the European session on Friday, prior to breaking under the ascending trend line consolidation area. This comes in the context of a corrective move higher, from 2 month + lows, which came after the EUR/USD printed a bullish pin bar reversal setup on Tuesday, above the 50% correction point and 100 SMA. The corrective move higher had seen around 140 pips upside during the Friday morning session, but met with selling pressure at the key 1.2800 area as previous support became resistance.
EUR/USD – H4 Chart (figure 1)
When referencing the EUR/USD daily chart(see figure 2 below) we note that price is now essentially trading in a consolidation range between the 100 and 200 period period daily SMA levels. Higher timeframe chart analysis also shows the first weekly basis higher close has now formed for the euro/dollar, following a series of three consecutive lower closes.
EUR/USD Analysis – D1 Chart (figure 2)
Market sentiment overview –
- COT report. The EUR FX net short position has increased by approximately 25%, to 84K, versus the previous 67K level, as large speculators moved into USD longs according to the latest data from the CFTC.
- In related markets we note the US S&P 500 index (which is widely viewed as a barometer for risk) closed down 1.5% on the weekly basis printing the second consecutive negative week.
- Benchmark 10-year U.S. Treasury notes have seen yields hitting the lowest level found in over two-months (yields move inversely to price), as the “fiscal cliff” and worries in the middle east had treasury prices broadly gaining.
- EUR/GBP closed the week marginally higher and back near the 0.8000 round number level. This comes after the GBP/USD pair managed to print two consecutive higher closes on Thur/Fri, but ultimately finished the week with another weekly basis decline, albeit with a long shadow on the weekly candle showing buying interest.
- The USDX (dollar index) experienced the 4th consecutive weekly gain and is trading just under a key near term technical level, comprised of 50% corrective retrace/previous price structure lows, which may see an element of resistance.