Euro / Dollar Technical Forex Analysis for Forex Traders

The Euro broke the support specified in yesterday’s report 1.2869, and dropped as expected, “almost” reaching the first suggested target 1.2775, as it stopped just 5 pips before it, to move 550 pips away from last Friday’s “Jobs-report-top”. We have commented on the retest case which took place after the Fed’s statement Tuesday evening by saying: “it is a well known technical principle that such an accurate retest confirms the break it followed, and the new direction, which is down in this case. Looking at the attached chart, we can see that: 1. the rising trend line was broken decisively and 2. the price retested this line in an accurate fashion. These are obvious indication of a falling trend. Therefore, unless the price goes back up to trade above the broken trend line, we expect more downside activity.” Today, there is more to talk about technically; there is a complete 5-wave count for the rise from 1.1875, but does it mean that the uptrend is over? Also, there is not one but 2 channels on the daily chart. The first (shown in RED on the attached chart), combining the tops of the waves 1 & 3, which was broken on Tuesday. The second channel (shown in BLACK on the attached chart) combines the tops of waves 3 & 5, and was broken yesterday. The price is trying to come back inside it, but until this very moment it is still trading below it. Resistance is at 1.2922, and in case it is broken, this will mean we are back again inside the second channel. In this case, the Euro will continue building a correction for this massive drop, which will ideally target 1.3003 and 1.3074. On the other hand, the support protecting yesterday’s bottom is 1.2853, and if broken we will target the same target set as we did yesterday: 1.2775 & 1.2681.

Support:

• 1.2853: the rising trend line from yesterday’s bottom on the intraday charts.

• 1.2775: first of the main Fibonacci retracement levels (the 38.2% level) for the whole rise from this year’s low 1.1875 to last Friday’s and 3-month high.

• 1.2681: Jul 14th low.

Resistance:

• 1.2922: the resistance which actually stopped yesterday’s rise.

• 1.3003: short term 38.2% Fibonacci level.

• 1.3056: short term 61.8% Fibonacci level.