FX Traders’ weekly short and medium term technical EURUSD picture
The following is a partial summary of the conclusions from the fxempire.com weekly analysts’ meeting in which we cover outlooks for the major pairs for the coming week and beyond.
Overall Risk Appetite Per Weekly Charts Of Leading Global Stock Indexes
We skip this section this week because the modest bounce in risk appetite as reflected by the week’s bounce in the indexes does not help explain the EURUSD’s movements, as the usual positive correlation between the indexes and the EURUSD broke down last week.
Why? Both the indexes and the EURUSD reacted to the same developments in opposite ways. Specifically:
- Stocks were up mostly on a combination of a modest easing geopolitical fears and a ‘bad news is good news’ reaction to poor data worldwide, which had investors anticipating new or at least continued low rates from central banks.
- The EURUSD dropped on continued recognition that the ECB is much more likely to enact EUR-dilutive easing than the Fed, which is either going to keep policy steady or tighten a bit, with rates beginning to increase sometime between late 2014 to late 2015, as well as a belief that economic damage from Ukraine-related sanctions is far from over and will reinforce EU economic weakness and the ECB’s dovish stance.
Thus index movements didn’t help us explain EURUSD price action this week.
EURUSD Weekly Technical Outlook: Near Term Bottoming Or Breakdown Of Key Support?
EURUSD Weekly Chart July 22 2012 to Present
KEY: 10 Week EMA Dark Blue, 20 WEEK EMA Yellow, 50 WEEK EMA Red, 100 WEEK EMA Light Blue, 200 WEEK EMA Violet, DOUBLE BOLLINGER BANDS: Normal 2 Standard Deviations Green, 1 Standard Deviation Orange. Green downtrend line from EURUSD peak of July 2008 to present, green uptrend line from August 2012 to present. White Fibonacci retracement lines for downtrend of August 2008 To June 2010, yellow Fibonacci retracement lines for downtrend of May 2011 To July 2011.
Source: MetaQuotes Software Corp, www.fxempire.com, www.thesensibleguidetoforex.com
01 Aug. 16 21.25
Key Take-Aways Weekly Chart: Key Support At Breaking Point, Next Levels To Watch
Continuing the theme of the past 5 weeks, the medium term outlook continues to deteriorate from a variety of technical perspectives, chart patterns, support breakdowns, and strengthening downwards momentum. In addition, the pair continued its slow grind down within its descending channel from May after a 5 week breakout above it.
The most outstanding change for the worst is the second straight weekly close below the last and strongest moving average, the 200 week EMA around 1.342. This second straight weekly close below it, along with a continued drop below it, brings us closer to calling a breakdown of this very significant support level.
