v The Euro had a second leg of rally from 1.2870 which led an advance to 1.4940, breaching the high of the first leg of recovery till 1.4282. The first leg started from 1.1874.
v The marker had broken the critical trend line resistance of 1.4150-the trend which set the market under a 2 and half year bearish trend.
v Presently, the market is in a correction mode of the second leg and treading around 1.4200 levels- a 740 points decline from the high.
v The EURUSD has closed below the 50 day’s EMA for the first time after 14th Feb 2011 suggesting bearish set up. The 100 day’s EMA level is pegged at 1.4030 levels. The 10 and 20 days EMA has seen a bearish crossover
v The weekly relative strength index (14) is treading lower and quoting around 0.55 levels and holding the trend line support of 0.54. The daily RSI (14) is almost at the oversold area and treading around 0.38 levels.
v As per Fibonacci relationship, the 1.4140 is the 38.2% retracement level of 1.2870-1.4940 move, suggesting it as a one of support. The 50% level is at 1.3900 levels.
In our view, the 1.4140 breakout may push prices towards the 1.4030 levels- 100 EMA. A close below 1.4030 may bring in fresh technical selling in the market which has potential to pull down rates towards the trend line support of 1.36. On the higher side, 1.4450 may cap any advance.
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