Forex – EURUSD Technical Analysis Update Week Of 29th October
- EUR/USD broke below the ascending trend line on Friday (as shown on the daily timeframe chart below) before staging a comeback and closing near the daily open at 1.2936, forming a doji candle. This is showing indecision around the breakout area as the EURUSD bears failed to sustain lower prices on this forex major.
- The weekly close is marginally lower than the 61.8% retracement level of the last swing higher 1.2825 - 1.3136.
- Commodity Futures Trading Commission (CFTC) COT report update. The euro net short position of 55K has not diverged too far from the 53K level seen last week.
- Key potential support can be found around 90 pips lower at the 1.2830 area. This has the 200 day SMA and price structure lows closely aligned. A break below this area would be a significant technical development, we will however be monitoring the confluence of 100FE (Fibonacci expansion) and 38.2% Fibonacci retrace for a whipsaw rejection if support is broken (see the EURUSD Fibonacci chart below).
- On the flip side. Initial resistance, on any move higher , may be found around the 1.3000 round number. A break above 1.3000 brings the 1.3160 area back into focus which has capped price on two recent moves to the upside.
- The US Dollar Index, which provides a measure of the Dollar’s weakness or strength versus a basket of currencies, moved to a fresh seven-week high on Friday. The dollar index then proceeded to trade back into the recent range and closed at the 80.00 level, around 10 pips lower than the open. The USDX daily chart can be seen below. Yields on treasury 10-year note yields traded in close proximity to a five-week high.
- We also note that the EURUSD is close to forming a Golden Cross (see the chart highlighting this below), this is a common and well known signal which comes after the 50 SMA (50-day simple moving average) moves above the 200 SMA (200-day simple moving average. We do not place any great weight on this pattern but many market participants do.
EURUSD Daily Chart
EURUSD Golden Cross
EURUSD Fibonacci
Dollar Index Daily
can you be kind enough as to explain point 3 in relation to COT please. How do you interpret the COT figures, the commercial traders? the speculators? or the lot. I have been trying to draw a relationship between the COT figures and the price, but I cannot come to a correlation between the two. I am still working on it though…….
Hi arthurwsp, I often include the COT report figures as a reference but the price action is my primary focus. In answer to your question. This week the net non commercial position was -55,219 and last week it was -53,495. This shows there is not a significant delta between positioning for the key large speculator group on the weekly basis (hedge funds, banking institutions etc). In terms of drawing a parallel with price please see the following chart.
http://www.forex-fx-4x.com/wp-content/uploads/2012/10/cot-report-2012-10-29_00-02-26.png