EURUSD Technical analysis

[Lukman]

The EURUSD pair had a corrective day today. It seems that the 1.3640 level showed some resistance. We also have a bull flag candle stick formation on the daily time frame. As long as prices stay above this key level we may see 1.3800 in the later parts of the week.

We have a couple of releases today. The focus still remains on the merging markets where one of the important assaults have been Turkey's attempt to stabilize its currency. We had the Preliminary GBP Q4 results which came out at 0.7% unchanged. The GBP weakened slightly. In the US, durable goods orders, NAHB housing market index and conference board consumer confidence will be released.

Focusing back on the EURUSD this is a bullish looking market on the daily time frame.

The MACD is about to trade to the upside
Prices are trading above the 20 SMA
Prices are trading above the weekly pivot.

A corrective move to the 1.363X has occurred now bullish drive back to the 1.3800 levels may be expected.

If the correction fails then we may simply trade the breakout.

An hourly close back below 1.353 invalidates this daily bullish outlook.

-Bullish bias, bounce from the 1.363X, move to 1.380X

 

[Lukman]

Yesterday our long trade was activated around the 1.364X regions. At one point we were 40 pips up. Currently the pair simply balances on top of the weekly pivot waiting patiently for the FOMC this evening.

As stated above the main talk of the town today will be the FOMC. It is widely thought that the Fed may cut its monthly bond purchases by an additional 10 billion USD in todays meeting and hence stick to its unofficial plan for tapering. We have seen how these events play out many of times with the FED always pulling out an additional rabbit from the hat. The financial markets continue to keep a watchful eye on emerging markets with the possibility of some focus on the announcement of the interest rat decision from the South African central bank.

Focusing back on the EURUSD this is a bullish looking market on the daily time frame.

The MACD is about to trade to the upside
Prices are trading above the 20 SMA
Prices are trading above the weekly pivot.

We can see the potential bull flag formation on the daily time frame, but the fundamental release today has the power to simply destroy this setup. The trades that we will be set to break even, so even if we are wrong we lose nothing, but if the tapering does not occur that will present a risk free setup with targets of 1.3800.