EUR/USD Short-term Tech­ni­cal anal­y­sis

Financial Mirror (Cyprus) - - FRONT PAGE -

Analysing the daily chart of EUR/USD it is clear that the pair is mov­ing in a down­trend. We ob­serve the for­ma­tion of a bear­ish fail­ure swing re­ver­sal pat­tern which oc­curred be­tween June 18 and July 10.

The first top (A) was formed on June 18 with high price at 1.14351. A bot­tom (B) fol­lowed on July 7, with low price at 1.09151, which was again fol­lowed by a sec­ond top (C) on July 10, with the high price 1.12150 be­ing lower than the pre­vi­ous top (C < A).

We then ob­served a down­ward move­ment, break­ing the bot­tom of the swing (B) and con­tin­u­ing un­til Fri­day, July 17, when the price closed at 1.0817. Since we see a break and a close of a can­dle­stick be­low level B, in­di­cat­ing that the bear­ish re­ver­sal pat­tern is con­firmed, the price is more likely go­ing to move fur­ther down.

Tar­get can be set sim­ply

by

mea­sur­ing

the

ver­ti­cal dis­tance from point A to point B.

We then use that dis­tance as a tar­get from the break point of level B and fur­ther down, to see that the price is likely to reach the level around 1.0395.

Fi­bonacci lev­els also con­firm our tar­get set­ting. By us­ing Fi­bonacci mea­sure­ment from point B to point C, we get the first tar­get (161.80) around 1.0730. The sec­ond Fi­bonacci tar­get (261.80) is around 1.0430, close to our swing tar­get, in­di­cat­ing that over the next few days, the EUR/USD cur­rency pair is more likely go­ing to move fur­ther down to 1.0730 and if that level breaks, the price might reach the area of 1.0395 – 1.0430.

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