EURUSD – Technical Analysis for Binary Options brokers
Technical price patterns on the higher monthly and weekly charts illustrated possible bullish recovery of the current price decline of the Euro. However, a fundamental announcement of Europe’s GDP proved that the recovery may be stalled for a while as the U.S dollar shows strength. Read on for deeper insights into these events. Fundamentals
Europe Gross Domestic Product
Considered a medium impact indicator is the Europe GDP, which is the value of all produced goods and services during the quarter. Here, a comparison of the GDP growth to that of the previous quarter is shown on the chart below. The actual value came out the same as the previous and consensus. The Europe GDP has been in a decline since Q4 of ’17 and into the Q4 of ’18, confirming further weakness of the EURO.
U.S Producer Price Index
The United States’ Producer Price Index (PPI) is a high impact event that may be an early signal for inflation trend changes or its confirmation. The growth of this indicator supports the strength of the USD.
EURUSD: Monthly Chart
Last time we analyzed the EURUSD monthly chart, we highlighted the importance of a breakdown below the bullish accumulation support on December 3 ’18. Well, upon a bearish closing bar of January ’19, a spinning top price pattern is signaled which may threaten the strength of the bullish accumulation support of 1.12154. In the event of a price close below this level, we should look forward to further nose dive of price as this would be a significant breakdown of bullish accumulation.
EURUSD: Weekly Chart
Indeed it has been a rollercoaster from the weekly chart perspective of the EURUSD. The pair from the above time frame started off by triggering double bearish accumulation between 29 October and 05 November ’18, from where the pair got trapped in range of support and resistance of 1.15001 and 1.13019 respectively. A bullish regular divergence was triggered within the same period the bearish accumulation got triggered, showing hope for a possible bullish trend.
As new price bars are formed, the pair again triggered a more recent bullish accumulation with critical support and resistance levels at 1.14728 and 1.13428 respectively. This bullish formation was expected to lead the way into a lasting bullish trend, however, the opposite happened. A breakdown of the bullish accumulation support was triggered on 04 February ’19 therefore confirming a bullish hidden divergence on the same date.
EURUSD: Daily Chart
The above daily chart shows a short term bullish trend initiated by a railway track price pattern, and later reinforced by a bullish accumulation on January 29. This bullish move could not stand the test of time as price collapsed to a breakdown of hidden bullish accumulation on February 5 ’19.
EURUSD: 4HR Chart
From a 4hour chart view, we get a slightly different insight into the dynamics of the exchange rate of the Euro to USD. Coming from a double bearish accumulation signaled on February 07 ’19 02:00, the price started to plummet in favor of the U.S. dollar, setting up resistance at 1.13689. This presented a profitable short trading opportunity with a0.09% risk compared to a 0.86% return, after which the pair into an oscillatory formation, triggering a hidden bullish accumulation on February 13 ’19 06:00.
The pair recently triggers a regular bullish accumulation on February 14 ’19, in favor of the U.S dollar.
From our analysis, the higher weekly and monthly time fram currently dictate the longer term direction of the EURUSD trend, and a breakdown of the critical weekly chart support is a confirmation of a bearish continuation. Although the lower 4hour chart offers quick bullish scalp trades, we would rather go in the direction of the bears, in alignment with the higher time frames.
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