Tuesday, July 21, 2015

EUR/USD

Despite the improvement today, market sentiment for the pair remains quite bearish. What we could potentially be seeing is the early stages of a consolidation or correction in the pair. Given that the pair spent most of the last week on the decline, it would not be surprising if it was the latter.
A look at the weekly chart would support this view with last week’s candle  a marabuzo  being very bearish. It’s worth noting that this can often be followed by a small move in the opposite direction despite it being so. The key test comes around the marabuzo line   the mid-point of the candle  as this holding is seen as being a bearish confirmation signal.
The first level of resistance for the pair comes around 1.0907, Friday’s high which also roughly coincides with 7 July lows. The rejection at this level on Friday could have been seen as confirmation of the ongoing sell-off, but the lack of momentum and failure to break through the 1.0820 support suggests otherwise.