By: Mike Kulej
The EUR/USD pair sold off sharply last week, closing at the low for the period. This often indicates a continuation of the trend later on. On Monday, however, that has not happened. Why?
On technical bases number of factor contributed to this event. First is the support. Back in June, the EUR/USD made a minor low at 1.2730, during its advance. This low proved to provide a support oonday, when the sell off was swiftly rejected at that level. In addition, the up trendline, drawn from 1.1875, is a supportive element here. Both the support and the trendline meet exactly at Monday’s low, making the 1.2730 a very hard level to break.
Other technical indicators also suggested that the move down could be running out of steam. The Stochastic oscillator had an extremely low reading- 2, in a 1-100 range, the lowest level this year. This indicates a short term oversold market, probably due to the speed of the selloff.
For now, at least, the uptrend is still valid. However, if the trendline is broken, the support will likely be retested. Should it give way, the market could drop to 1.2150, another support level.
EUR/USD Support Still Holding
DailyForex.com