After a Few Weeks of Rise eurusd Reverses

After a few weeks of rise, eur/usd finally reversed. The turnaround started on Monday (yesterday), when having reached 1.1370 resistance the pair formed bearish rail road tracks pattern and started collapsing. Today’s price action only confirmed bearish bias in Euro. You can open both 15 and 1 hour chart to see that. Price tried to rally to intra day resistance of 1.1330 two times today, but failed. Each time it formed a bearish candle pattern after which price fell. As yesterday’s (low) support of 1.1280 was broken during US session we may assume that the move downwards will only accelerate this week. Be ready to sell at failed rallies to intra day resistance levels. 

Tomorrow’s possible intra day resistance will be at 1.1280. You remember the old saying that previous support becomes resistance and vice versa. I think this could be true in this case too. 

The next level of support is seen in the area of 1.1240-1.1220. Hourly chart clearly shows that Euro bulls had to work hard to break the level from the 8^th to 10^th of September. 

Important fundamental data that may impact the exchange rate of the pair is on Thursday when Federal Open Market Committee Rate Decision is announced at 18:00 GMT. Watch price action after the event and be ready to go in the direction market goes. 

Rail Road Tracks in gbp/usd

Monday price action in gbp/usd has been as it usually is. If you monitor how currencies move at specific days of the week, how they open and close, you will surely notice some tendencies. This week was no exception. We saw directional moves during the past week as the cable rose against US dollar for the whole week. The tendency continued on Sunday open. You need to know that in most cases if there was a directional move previous week and market ended moving in that direction you are going to see a reversal on Monday. 

As always there was a false move up during early European session (during Frankfurt open) and the move upwards continued till the start of London session. Market then formed rail road tracks candle pattern and reversed sharply to the downside. I expect some ranging today and possibly tomorrow and then a direction to form. 

There are some important fundamental releases this week, the key one being FED Open Market Committee Rate Decision at 18:00 GMT on Thursday. I doubt if we are going to see anything significant happening before that date, but you should watch UK Consumer Price Index release at 08:30 GMT tomorrow and UK Unemployment change at the same time as CPI on Wednesday. 

British Pound Starts the Week on a Bullish Tone

After two weeks of falling, gbp/usd started the week on a positive note. On Sunday open it gaped down, but quickly came up and did not break lower anymore. It moved towards the low during European session, but formed a bullish w pattern on 15 minute chart and is rising now. You may see that intra day resistance is at 1.5273 level (Friday high). Intra day support starts at an even number of 1.5200 with key support being at 1.5160 (Sunday open low). 

There is no key fundamental data today or tomorrow that might impact exchange rate of the pair. On Wednesday GBP Industrial production is to be released at 08:30 GMT. Even more important data is coming on Thursday at 11:00 GMT. Bank of England interest rate decision is scheduled at that time. I have a hunch that US dollar bullish trend might be over for now and British Pound will strengthen from now on. On Friday inflation numbers from UK will also be carefully watched by market participants. Later in the day traders will also get USD U. of Michigan Confidence data, which should not have big influence on the pair.

Euro is in a tight range before making a move

As expected eur/usd went down yesterday after ECB chief Mario Draghi started giving a press conference. The move was over 100 pips in over 15 minutes. Impressive! More that type of speeches! Ok, today, if you look at 15 minute chart you will see that the pair is in a very tight range. What does that tell us? That there is going to be a breakout either direction. As we expect the downtrend to continue we are waiting for the low of the range to be broken to enter a short position. Yah, that is a breakout trade and those do not work out that often, but looks like this one will due to the direction and a move up towards the high of the range, which has already occurred during Frankfurt open.

The move will probably occur sometime after London open. On the other hand, we have Non Farm Payrolls (NFP) during US session and as you know these tend to create tremendous volatility across the board. If the move does not materialize by then I will probably remove my short order. On the other hand, smart money can move price down and take profit on the shorts after the release. Anyway, let’s not speculate, but wait for the event and see what happens. 

eurusd is consolidating before ECB rate decision

There hasn’t been much movement in eur/usd pair this week. It is neither rising, nor falling. No higher highs and no lower lows. It means market is stuck and waiting for something. No wonder for what. ECB rate decision is expected to be released at 11:45 GMT. No surprise is expected. However, any slight hawkish or dovish comment can send the pair up to previous high of 1.1697 (24^th of August) or down to the low of 1.1151 (28^th of August low) and possibly much lower. Either scenario is possible, but downside is probably favored. Why?

ECB is not planning to raise interest rates any time soon. FED is contemplating rate hike and this puts Euro in a vulnerable position. It is probable that current run to 1.1700 level was simply profit taking on short positions in Euro and a healthy counter trend move that happens in any trending market. However, FED seems to be too slow in their decisions and this can affect short term fall of US dollar. So, any sign of bearish or bullish ECB comments will affect exchange rate of the pair dramatically. 

One other possible bullish sign for Euro is that price broke below important 1.1233 level yesterday during US session, but is going back above it now. 

Let’s wait for European Central Bank.