07 Mar EUR USD Analysis & Strong Support; 7th March 2013
Not sure if I’m interested in trading this just yet but as EUR:USD bounced strongly from support I think its worth keeping an eye on to monitor if/when support is retested.
The situation is slightly complicated by the fact that I have Support in 2 different places depending on the time frame you look at, so I’ll detail both scenarios before throwing a spanner in the works with a 3rd Scenario!
On the 4 hourly time frame I have strong support marked at 1.3000 and price has clearly reacted from it numerous times proving the bull/bear divide at this level on this time frame. Also worth noting is the recent rebound from this support coincides with positive MACD divergence:
On the Daily time frame I have an approximate level of support a little lower down in the 1.2870 region. Now this is approximate so there’s no rule to say it needs to be hit before a new rally can commence. It is supported by a nice looking MACD histogram and fast MACD moving average about to cross the Slow.
However, if you are familiar with my trading style, I don’t like entering positions without seeing a confirmed test of the green 200 MA, and thus far that has not occurred, so a long trade isn’t for me just yet:
Moving out to the Weekly time frame and we can see why price rebounded before touching the 200 MA from the Daily time frame. This trend line has been in place since 2001 and although it was broken during last Years sell off, it appears to have provided support for this Week’s candle.
The question for me based on my trading style is, how can the Daily 200 MA get properly tested if price cannot break down through this Weekly trend line? Only time will give us that answer, but one possibility is that price chops around current levels for a couple of Weeks ‘waiting’ for the Daily 200 MA to catch up (time decay I guess you could call it).
As stated earlier, I’m not ready to jump into a long position here, but its clear price is at an inflection point on all time frames, and this is worth watching ahead of any swing trading opportunities that will surely arrive in the near future.