2016–05–19 Eur/usd technical analysis
I hope you are all doing great and in a better mood than the euro. Yesterday we had the FOMC minutes and the FED was not happy with the market ruling out the probability for a June rate hike and sounded very hawkish suggesting that hiking in June is not ruled out, but very likely IF the data supports it. The dollar was rather sideways these past days and with lower lows and that changed yesterday. The stock market turned down with Investors dumping stocks after odds increasing back up towards maybe 2 hikes this year. The eurusd reached its 38.2% Fibonacci retracement level after it’s Bullish run from past November Lows at 1.0520 and Aprils High’s 1.1618. On the stochastic Indicator we can see this pair massively oversold and a cross signal forming indicating a buy signal.
The upper downtrend lines in red where broken a few times and the lower uptrend lines all still valid, favoring the current bullish momentum for this pair. The first green downtrend line can be broken and open a continuation of the corrective move to the 50% Fibonacci retracement level at 1.1080 or even cross the big 1.10 psychological level towards the 61.8% retracement around 1.0940. The last broken downtrend level (dashed in red) is now also adding supportive strength to this current level. Here will be battle between bulls and bears until it goes north or south. Below 1.1080 I see SL hunting opportunities for the big banks and below 1.10 traps for late sellers. The market has bought the dollar on rumors of a possible hike in June and now even if they really hike the US figures will start to slow down. Also this month we had great consumer figures, but statistically this month is where the weather improves and people go out and shop more after several winter months.
The gbp/usd (cable) wrote its own history moving north, strengthening after better figures and also new polls increasing odds for a “Stay” Vote. In two days he rose more than 300pips with no significant correction. The last downtrend line from this months highs at 1.4770 would be reached around1.4680 where we can expect this pair to lose some steam.
Lets keep an eye on these levels and wait for further developments from the FED and Brexit.