Looking to Sell EUR/USD Next Week
- Recovery should be mild if 2013 high is significant
- 1.3775 is key resistance
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The strength in EUR/USD over the past couple of days suggests the intermediate low we were looking for around the end of the week has come a little earlier than expected. This puts the Euro in a positive cyclical period for the next few days. We will be monitoring the price action during this time very closely. Our base case is that the Euro put in a significant peak late last year and that a downtrend of some importance has started. If this assumption is correct then positive cyclical periods in the exchange rate should be relatively modest in terms of price. Over the next few days we need to see gains in EUR/USD stay under the 61.8% retracement of the year-to-date range at 1.3745 and ideally below the January 14th swing high of 1.3698. Aggressive strength though the former will do some serious damage to the bear case. The next turn window in the Euro looks to be around the middle of next week.
EUR/USD Daily Chart: January 23, 2014
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risks in Coming Sessions:
LEVELS TO WATCH
Resistance: 1.3720 (Fibonacci), 1.3775 (Fibonacci)
Support: 1.3595 (Fibonacci), 1.3535 (Gann)
Strategy: Sell EUR/USD on strength
Entry: Sell EUR/USD at 1.3720
Stop: 1-day close above 1.3775
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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