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Technical Analysis EURUSD : 2015-02-02

Consolidation

Let’s consider the EUR/USD currency pair on the H4 chart. We continue to keep an eye on euro as ECB announced quantitative easing program. Recall that the ECB regulator will start printing money this March. The planned bond-buying program amounts to 60 billion euro every month. The QE program will last till September 2016, with total purchases surpassing 1 trillion euro. This event is a landmark for long-term investors: the liquidity filling will support exporters, but currently it leads to euro weakening and causes inflation in the euro zone. As a result, the monthly and weekly movements of EUR/USD are still negative: major investors are fretted, and we won’t try to resist the policy of financial institutions, analyzing only sell signals.

technical-analysis-charts-eur-usd

The H4 trend is fully consistent with the long-term trends. The price currently shows the consolidation period: this uncertainty is determined by geopolitical tension in Ukraine and the first profit-taking by the traders who went short. We expect a new volatility impetus after the price breaks the triangle downwards. A pending sell order may be opened below the support level at 1.12540, which is confirmed by the lower boundary of Donchian Channel and the Bill Williams fractal. Conservative traders are recommended to confirm the price breakout based on the oscillator signal. At the moment RSI-Bars indicates the trend reversal in favour of bears. The "double top" bearish pattern was formed at 55.3694%. The final confirmation of the price breakout can be obtained after the oscillator bar overcomes the support level at 38.6066%. Stop Loss is to be placed above 1.13888. This mark is confirmed by Parabolic historical values and the last resistance fractal. After order opening, Stop Loss is to be moved after Parabolic values near the next fractal high. Thus, we are changing the probable profit/loss ratio to the breakeven point.

 

Position Sell
Sell stop below 1.12540
Stop loss above 1.13888

Dear traders. For the detailed report of the strategy based on analytical issues of technical analysis click here.



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