By: Mike Kulej
After severe sell off, EUR-USD is approaching critical support level at 1.2630, low reached during 2008 financial panic. Market is almost certain to test it. Technical indicators suggest oversold conditions, with MACD in a divergence position (not confirmed yet) and CCI weekly reading at almost historical extreme low, also established in 2008.
However, price action remains in strong downtrend, with trend accelerating in recent days and Friday close at weekly low – bearish sign. Should EUR-USD find support at this level, rebound to 1.3400 or even 1.3700 is possible.
On the other hand, support failure indicates trend continuation to 1.1650 in near term. Either scenario requires confirmation by decisive action on at least daily chart. Until market shows which direction is going to take, something that could be decided this week, trading time frames of lower magnitude might be a better choice for most traders. Risks are much smaller and, with elevated volatility still prevailing, intraday moves should remain large, providing good trading opportunities on both sides of the market.
A Big Test for the Euro
DailyForex.com