Welcome to the inaugural ‘Daily Fib‘ by Fibbinarchie. Given that this is the first one, I think it is worthwhile looking at the overall bigger picture of EURUSD technically from a weekly perspective and then drill down into the lower timeframes.
Below is a weekly chart covering the price range going back to 2001:
From an outer perspective, the 1.2030/2000 level has been very supportive since 2009 whereas the down trendline capping the highs in the same period is now resistive in the 1.3900/1.4000 zone.
This action of lower highs whilst maintaining a base of lows in the 1.2000 area makes me think that the EURUSD is being compressed and will, at some point over the next year, make a break out to the upside. A breach of the 1.2000 will make me reconsider otherwise.
Expanding the weekly chart to examine the price action of 2013:
2013 has seen EURUSD trading a sideways consolidation between 1.2750 and 1.3750. The latter part of the year has seen a rising channel with a potential target in the range of 1.3750/1.4000. As with all major resistance [and support] levels, it cannot be anticipated that the target zone will be broken immediately. However, a break and retest would certainly entice the bulls back into the fray.
To the downside, a breach of 1.3000 opens the path to the 1.2750 support zone beneath which there is little in the way of support until the 1.2500 area.
To ascertain the potential price action in the coming days, I’ll take a look at the daily chart:
The breach of the upwards trendline since July 2013, followed by the test of the same trendline after the breach, might entice the bears into play. However, the daily close above 1.3480 former support last Friday might be enough to ensure that the bulls get back on board.
Exploring this scenario further, the bulls would need to take hold of the reigns for a look at 1.3600/50 and regain the support of the upwards trendline since July 2013. Successfully doing so would bring the 1.3800 zone back into play. Having been supported by the 100 daily SMA for the last two bounces does lend some weight to this argument.
Failure to maintain 1.3480/3500 would certainly bring the bears out of their caves for a look at the 1.3300 November lows. Through which opens up the path to 1.3160/3100 and then 1.3000.
Well, that’s the weekly look at EURUSD. Let’s see what the Asian market has to bring overnight and I’ll provide the Daily Fib tomorrow morning.
Good trades and may the Fibs be with you!