EURUSD Technical Analysis Update
Euro Dollar Sentiment overview
Large specs are still heavily short on the EURFX CME but net “large speculators” shorts dropped slightly from –148,641 on 14th Feb to –142,159 on the 21st Feb.
- Greek bailout/debt restructure; EUR100 billion debt write-down which is an element of the new approved multi-billion euro rescue plan. The perceived risk is now in the implementation area rather than approval.
- EURUSD rallied over 300 pips last week. The EUR also gained strongly versus AUD, JPY and GBP amongst other currencies.
EURUSD Technical Overview
From a technical perspective price is now making higher lows and showing bullish momentum by breaking above the cloud as can be seen on the Ichimoku chart below. The last pullback to the Kijun Sen met with strong buying interest and more of the same could potentially be experienced again if price can retrace lower over the coming trading sessions. The 1.3320 previous high is an area that may subsequently provide support if hit; short covering looks to be the main driver behind the current price action and any pullback in the current up move has seen a subsequent strong follow through higher.
Potential resistance is seen as follows.
- R1 – 1.3500 psychological round number level.
- R2 – the 1.362o area has 61.8% retrace and D1 365 EMA confluence.
- R3 – Fe 100 expansion @ 1.3667. The close proximity of R1 and R2 gives a resistance confluence range area.
It is worth noting that the dollar index has hit a technical support confluence area at 78.30 which could be helping cap dollar denominated pairs at present.
Potential Support levels.
- S1 – 1.3320 previous resistance could become support.
- S2 – Tenkan Sen currently @ 1.3230.
- S3 – Kijun Sen @ 1.3183.
Fibonacci retrace levels to be added to the above once a confirmed swing high is in place. The 2 touch ascending trend line has also been noted and could see a reaction on the 3rd touch which could come into play if price consolidates as the week progresses.