Forex: EUR/USD: Falling trendline being tested

on Aug 7, 2013
Listen Wednesday August 7th_: Yesterday the EUR/USD closed at 1.3306, breaking the 1.3300 psychological level and gaining half a percent on the day, after trading within the range 1.3245 to 1.3322. In the process, the price reached the descending trendline passing through the tops of mid-2011 and again in February and June this year, and in the past few days the price has broken through the minor resistance levels of 1.3266 and 1.3287, which turned into supports.

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At the moment the price action is testing the trendline and the newly established resistance level at 1.3310. So far today, the pair has been moving between 1.3291 and 1.3311 and right now is residing at 1.3305.
Fake outbreaks above the trendline may bring the EUR/USD to the 19 June high of 1.3415, where strong resistance will very likely be encountered, with a cluster of pending shorts ready to push the pair down under that level.

The 1H chart is exhibiting a MACD (9,12,1) divergence, which is a bearish sign and the price may depreciate short term. If this proves to be the case, the price will drop towards the 1.3000 level, but before that point is reached the pair has to overcome the lows of 25 July at 1.3164 and 18 July at 1.3065.
Contrariwise, a bullish viewpoint is supported by the price action currently happening above the 89- and 200-period simple moving averages on the 1H, 4H and daily time scales.
Today’s resistances: 1.3315, 1.3345 and 1.3370.
Today’s supports: 1.3290, 1.3245 and 1.3220.


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