FX TECHNICAL ANALYSIS
EUR/USD In the Euro/Dollar trend, since the introduction of Euro in January 1999, we can notice, as a whole, 3 different macro-phases: Phase I ( Jan 1999-Apr 2002): fall, consolidation and re- accumulation. Aſter being exchanged in the 1.1800-1.9000 area, just aſter the start of transactions in January 1999, the pair EurUsd fell to a historical low at 0.8231 on October 26th, 2000. From that level, there was the developing of an accumulation phase, that went on until April 2002. Phase II (May 2002 – Jul 2008): euro-rally. Since May 2002, we went through a long phase dominated by a strong euro – or, better to say, by a weak dollar – that brought to a historical high at 1.6038 (+95% from the bottom) on July 15th, 2008. Phase III (Aug 2008 – today): bounce and stabilization of the US Dollar. Along with the worsening of the financial crisis, the US dollar has kept on strengthening, touching a peak vs. euro on June 7th 2010 at 1.1876. Te trend of euro vs. dollar in the last four-and-a-half years could be described, as a whole, as weak-sideways, with a new worsening since Spring 2011 due to the increasing of tensions in the peripheral countries’ sovereign debt. In the second half of 2012 and throughout
January 2013 – along with a certain cheering-up within the euro-zone and the concomitant further Fed’s quantitative easing – the euro rallied steadily, rising from the July 24th bottom at 1.2042 to a peak on February 1st at 1.3712. Te pair then began going down again, pushing to the support, also psychological, around 1.2800-1.3000, where it has been trading in the last weeks. Te euro-recovery from the end of July 2002’s bottom is not enough to provide bullish signals for the euro in a strategic horizon, as the recent decline seems to confirm. Te technical picture for the euro remains fragile, even in comparison to an intrinsically weak currency as the US dollar. As long as the pair trades below 1.3200-1.3300 the technical outlook remains very weak: last weeks’ dynamics looks like a distribution phase, that should therefore anticipate the resumption of the down-trend started from the February 1st’s peak at 1.3712. Te first target is around 1.2800, then the strong support in the 1.2600/60 area, a break below which would provide a bearish signal for the months to come, targeting 1.2335 and aſterwards (premature) the July 2012’s bottom at 1.2042. For a stabilization signal, a swiſt rise above 1.3300 - followed by a consolidation above that level (not very likely) – is required.
TREND
Trend 3-6 months side-down S1 Trend 6-12 months up-side S2 Trend 12-18 months down-side S3
76 FX TRADER MAGAZINE April - June 2013
SUPPORTS 1.2800/45
1.2600/60++ 1.2335+
1.2985
SPOT PRICE R3
RESISTANCES 1.3400
R2 1.3200-1.3300++ R1
1.3135
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