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Candlestick Analysis for EUR/USD
09/08/2010 12:01 am EST
The EUR/USD currency continued to move higher last week and price looks set to test the Kijun-Sen (now at 1.2961 and is exactly the same level as the 50% Fibonacci retracement of 1.3334 to 1.2588). Above there would bring a stronger retracement of recent decline from 1.3334 to extended recent decline from 1.3334 to 1.3000 and possibly 1.3049 (61.8% Fibonacci retracement). Having said that, only a daily close above this level would retain bullishness and signal the retreat from 1.3334 has ended at 1.2588; then, headway to 1.3150 would follow.
On the downside, while pullback to 1.2775-76 (current level of the Ichimoku cloud top and previous minor support) cannot be ruled out, reckon the Tenkan-Sen (now at 1.2743) would attract renewed buying interest and bring another rise to aforesaid upside targets. Only below 1.2661 minor support would dampen this mildly bullish view, but a daily close below support at 1.2625 is needed to signal the rebound from 1.2588 is over and bring a retest of this level later.
Recommendation: Turn long at 1.2750 for 1.3000 with stop below 1.2650.
On the weekly chart, as indicated in our previous update, a small “hammer” candlestick pattern was formed and last week’s white candlestick suggests a temporary low has possibly been formed and consolidation with mild upside bias is seen for at least a strong retracement of the fall from 1.3334 to 1.3045/50 (61.8% Fibonacci retracement of 1.3334 to 1.2588), however, reckon upside would be limited to 1.3150 and price should falter well below resistance at 1.3334.
On the downside, while a pullback to the Kijun-Sen (now at 1.2847) is likely, renewed buying interest should emerge around 1.2776/80 minor support and bring such a rebound. Only a drop below last week’s low at 1.2625 would abort and signal the rebound from 1.2588 has ended, then the fall from 1.3334 would bring retest of 1.2558, below there would extend weakness towards 1.2433 (61.8% Fibonacci retracement of 1.1876 to 1.3334) and possibly 1.2300/10.
By the Staff at ActionForex.com
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