Welcome Nisfu Syaaban day for FXPrimus Trader for Harizan & Roslin.The Euro continued its recovery from 1.0819, and reached 1.1006 on Friday, in an expected reaction to bottoming close to Dow 66.7% retracement level. Between the 2 key retracements, the Fibonacci 61.8% at 1.0882 & the fibo 71.4% at 1.0791, there was a retracement that rarely gets my attention recently, and that is the Dow two thirds or 66.7%. This level is at 1.0836, and Wednesday’s daily low was 17 pips below it. Not a very accurate stop, but it is still reasonably close to it. This means that the drop from 1.1467 has now retraced two thirds of the previous move up from 1.0520, and may be it is time to start moving higher unless Greece default the debt payment with his creditors again.
Stopping this close to a retracement level was a sign that the Euro may start recovering recent losses, and it surely did, with a rising move of about 190 pips up from Wednesday’s low. But as it is always the case, a break above an important resistance is needed to confirm this outlook. Here, we should note that we actually got this break. As you can see on the attached chart, the price has broken above the falling trend line from May 15th top (the red line on the attached chart). The price even found support at this line after it was broken (a retest). However, the bulls were unable to break above another important resistance, and in fact the price topped close to it. If we draw the channel that contains all the price action after reaching May 15th top bottoms first, we can see that Friday’s high was very close to the top of this channel. Since it is a descending channel, its top has dropped from about 1.1014 on Friday, to around today’s current daily high (1.0967). This is why the current daily high will be our first resistance.
If we break above 1.0967, the Euro will be expected to significantly rise. Otherwise, the falling channel will continue falling as a recent news released that Alexis Tsipras blamed for the absurd demand on Euro, and the price will fall with it. In case we do actually break above this level, the bulls will still have to show strength against micro term retracement levels at 1.1014, 1.1059 & 1.1097. A top very close to any of those levels will be a warning sign that the recovery may not go on. But breaking above each of them will be good for the recovery scenario. In fact, after breaking 1.0967 these levels should give way easily, but nevertheless we always have to keep the other possibility in our heads, because technical analysis deals with probabilities and not certainties. A break above 1.1097 will be very good for the short term, as it will open the way higher towards the rest of the short term retracement levels at 1.1143, 1.1219 & 1.1282. A break above this last level in specific is the thing the medium term bulls need to be able to move beyond the latest top (1.1467), and in this case 1.1534 & 1.1675 make the first couple of good medium term targets.
Support start at 1.0889, which was tested with stunning accuracy whole this analysis is being prepared (current low is 1.0891). This is the micro term Fibonacci 61.8% retracement. This level is closely followed by the fibo 71.4% level at 1.0871. It makes sense to consider these 2 levels as one area. A break below this area will indicate that more weakness could follow. IT may be time to target the key level 1.0791. This very important level could offer strong support, and kickoff another bullish move of significant size. A close stop at this level could provide a good chance to get in and ride the bullish train, may be even a last chance. But if this level gives way, the outlook will become seriously weaker, and the single currency may drop towards 1.0750, 1.0707, and the important 1.0655, ahead of last month’s bottom 1.0520.
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