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1 Nov 2013
EUR/USD to drop back to 1.3100 in next few weeks?
FXstreet.com (London) - EUR/USD is sub the 1.3500 handle at the end of this week, which might be significant going forward.
Research teams at TD Securities offered further insight and explained that the risk of a correction in EUR/USD that they highlighted last week has been realized but the drop in the EUR has been more severe than we imagined. “Support in the low 1.37s and mid 1.36s provided no such thing, in fact, leaving EUR/USD looking rather precariously poised just above 1.3450 through the close of the week (converging with rising channel support, currently 1.3430). Note that the slow stochastic oscillator is rolling down bearishly on the daily chart and bullish short-term trend momentum that was evident last week has evaporated. The late September/early October lows at 1.3485 are the last line of support ahead of test of the low/mid 1.34 support zone. We expect a push lower early next week. We spot resistance in the 1.3550/75 range now. From the perspective of the weekly chart, there is no equivocating; a major top is in for EUR/USD and the extent of the sell off this week suggests a deep correction of the recent rally lies ahead. That means more pressure on the low.id 1.34s ahead and a drop back to the 1.31/1.32 area in the next few weeks. Note that the broader sideways pattern for EUR/USD seems to be prevailing. The market has been well-supported in the 1.27/1.28 range this year and remains well offered at or a little above 1.37. As such, a full retracement back to the low end of the range might be in store for EUR/USD in the weeks or months ahead. We are bearish”.
EUR/USD Levels
The 20 DMA is 1.3648, the 50 DMA is 1.3484 and the 200 DMA is 1.3219. RSI (14) reads 26.31. Supports are ascending from 1.3462, 1.3472, 1.3500, 1.3516, 1.3555, 1.3600, 1.3623, 1.3656 and 1.3696.
Research teams at TD Securities offered further insight and explained that the risk of a correction in EUR/USD that they highlighted last week has been realized but the drop in the EUR has been more severe than we imagined. “Support in the low 1.37s and mid 1.36s provided no such thing, in fact, leaving EUR/USD looking rather precariously poised just above 1.3450 through the close of the week (converging with rising channel support, currently 1.3430). Note that the slow stochastic oscillator is rolling down bearishly on the daily chart and bullish short-term trend momentum that was evident last week has evaporated. The late September/early October lows at 1.3485 are the last line of support ahead of test of the low/mid 1.34 support zone. We expect a push lower early next week. We spot resistance in the 1.3550/75 range now. From the perspective of the weekly chart, there is no equivocating; a major top is in for EUR/USD and the extent of the sell off this week suggests a deep correction of the recent rally lies ahead. That means more pressure on the low.id 1.34s ahead and a drop back to the 1.31/1.32 area in the next few weeks. Note that the broader sideways pattern for EUR/USD seems to be prevailing. The market has been well-supported in the 1.27/1.28 range this year and remains well offered at or a little above 1.37. As such, a full retracement back to the low end of the range might be in store for EUR/USD in the weeks or months ahead. We are bearish”.
EUR/USD Levels
The 20 DMA is 1.3648, the 50 DMA is 1.3484 and the 200 DMA is 1.3219. RSI (14) reads 26.31. Supports are ascending from 1.3462, 1.3472, 1.3500, 1.3516, 1.3555, 1.3600, 1.3623, 1.3656 and 1.3696.