EURUSD is trading lower from the past couple of sessions, and trading close to 1.3500 area. EURUSD broke an important short term rising trend line as plotted on the 4 hour chart shown below. After this break and drop down, I think we should be looking to sell rallies as the pair may move down further to test as low as 1.3300.
Looking at the 1 hour chart, there is a bullish divergence forming, which can push the pair to the upside in short term. The pair can move again to resistances such as 1.3530, 1.3550 and 1.3370. Once the pair pushes to the upside, makes a stop at any of the resistances mentioned, creates a divergence on the 1 hour chart and forms a bearish candle pattern, then we can jump into a sell trade.
Initial target should be around 1.3380 and final target could be 1.3300, which will be the gap close. Stop should be placed above 1.3610. I think as long as the pair is trading below 1.3610/20, it can move lower.
Reviewing yesterday’s events and trades
FOMC meeting minutes were released yesterday, which caused US dollar to gain some ground. Most of the fed members believe that the QE taper could occur in 2013. However, there were few members who suggested cautious approach. EURUSD and GBPUSD both trading lower following the release. Earlier in the European session yesterday, UK production data was released, which fell short of the expectations and caused GBPUSD to trade below the key pivotal area of 1.5950. In the Asian session, Australia’s employment data was released, which registered a decline in the unemployment rate to 5.6%.
Fundamental Outlook for the day
Three important events are scheduled later in the day, including BOE interest rate decision, US initial jobless claims and ECB President Draghi’s speech. BOE is expected to keep the interest rates and asset purchases unchanged. In the US session, US jobless claims release is scheduled, and it would be interesting to see whether jobless claims register another decline or not. There is still no resolution on the US shutdown, which is causing nervousness in the market.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBPUSD, AUDCAD, USDJPY, AUDNZD, GOLD, DOW JONES and S&P500.
Get it HERE: Vladimir’s Markets Forecast
Trade safe friends. Happy trading!
