Price & Time: EUR/USD Time Resistance Next Week?
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- EUR/USD bounces from key time/price support zone
- Important retracement levels await overhead
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EUR/USD has rallied smartly over the past week after finding support near the 1x1 Gann angle line and the 6th square root relationship of the year-to-date low. Interestingly the 38% retracement in time of the July – August advance (both calendar days and trading days) coincided with the reversal earlier in the week. The 61.8% retracement in time of the same move falls early next week and has me wondering whether we will see the euro turn down again and come under a bit of pressure heading into the highly anticipated FOMC decision on Thursday.
Key resistance to start the week looks to be around 1.1350 and 1.1420. This zone marks the 50% and 61.8% retracement levels of the August – September move lower. Some final strength to test this area would not surprise (though not ideal), but it would need to hold if EUR/USD is going to roll over into the latter part of the week. Traction over 1.1420 would warn some other cyclical relationship is at work and refocus immediate attention higher in the exchange rate.
Weakness under yesterday’s low in the 1.1170 region is needed to confirm that the euro has turned. Even if the negative near-term cyclical picture is correct, how strong of a move we can get with the Fed decision looming is a big question mark. The more important downside pivot is last week’s low around 1.1070 with weakness below there really needed to set off a more significant multi-day decline.
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.