Forex: Where to Sell the Euro?
- Overhead resistance should weigh on the single currency
- Cyclical analysis points to a correction
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The trend higher in EUR/USD looks to be in full force as the exchange rate touched its highest level in almost two years early on Thursday. Looks, however, can sometimes be deceiving. Our short-term analysis of the cycles suggests the next day or so is a potentially important “turn window” in the rate from where a downside correction could materialize. Bolstering this view somewhat is the proximity of several important resistance levels including the 61.8% retracement of the 2011 to 2012 decline at 1.3830, the 10th square root progression of the year’s low at 1.3880 and the 61.8% retracement of the 2009 to 2010 decline at 1.3895. If a correction is going to materialize during this cyclical turn window then we would expect it to occur from somewhere around this resistance zone. Strength over 1.3895 next week would completely undermine the short-term cyclical turn window.
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risks in Coming Sessions:
LEVELS TO WATCH
Resistance: 1.3830 (Fibonacci), 1.3880 (Gann)
Support: .1.3770 (Gann), 1.3655(Gann)
Strategy: Sell EUR/USD
Entry: Sell EUR/USD at 1.3870
Stop: 1-day close above 1.3895
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.