EUR/USD Week of March 26th
by Trader Rich
I stated a couple of days ago that I would try to analyze the market as if I was a Currency Strategist. I have no idea what it takes to be a Currency Strategist but I made an attempt today to analyze the EUR/USD for the upcoming week.
The EUR/USD has had 7 straight weeks of alternating price action (down, up, down, up, down, up, and down.) The 3 weeks prior to last, we had higher highs and higher lows but last week, the EURO failed to push above the prior high of 1.2208. The price closed on Friday at 1.2037.
A dark cloud occurred (which indicates that prices moved up strongly on the previous bar, opened higher, but then closed significantly lower). This implies weakness as the momentum appears to be shifting from the bulls to the bears.
We have support below from the 8 and 21 EMA’s at 1.2020. The 50 and 100 EMA’s at close above at 1.2144 and 1.2133 respectively. The 200 EMA provides longer term support at 1.1720.
MACD – Bullish
Stochastic – Bullish
RSI(7) – Neutral
RSI(14) – Neutral
DMI – Neutral and Trendless
Resistance: 1.2217, 1.2330
Support: 1.1785, 1.1868, 1.2000
Squeeze in progress since 1/27/06. The last exit from a squeeze was 11/11/2005.
Commitment of Traders Report
As you can see from my graph, non-commercial positions are building on the long side.
Bollinger Bands are 41.41% narrower than normal. eur is currently experiencing very low volatility as compared to its normal range. The probability of volatility increasing with a sharp price move is likely in the near future.
EUR/USD may remain in the 1.2000 – 1.2200 range. If the psychological important 1.2000 is broken, look for furthur downside to 1.1868.