EUR/USD Bullish Retracement Conditions Exist

By: Doug Rosen

In my analysis for the EUR/GBP I point out it looks bearish which means EUR weakness and in my USD/CHF I point out a bullish bias which means USD strength so a weak EUR and a strong USD means a bearish EUR/USD. However, as bearish as it may seem it does not mean we will not get bullish moves. I start out my analysis as always with the weekly chart. Very bearish indeed, yet we are outside the lower Bollinger Band which just happens to be wide open and pointing sharply downward. The weekly 5 ema has crossed below the 144 and is making touchdown with he 233 and the 13 ema has crossed the 21 and is also making contact with the 55 ema. These are extremely bearish indications. however, the stochastics is in the oversold zone, we are outside the lower Bolinger Band and we are gapped away from the 5 ema and we also are precisely at the 50.0 fib of the recent move up. This does not mean a reversal at all whatsoever but is definitely conditions for a bounce up or pullback of some sort which may offer a position for a short and possibly a brief scalp long. A retracement on a weekly chart could very well be an uptrend on lower time frames so lets keep an eye ot for bullish price action on the lower time frames until pullback levels are reached then we can take shorts. We cannot take a short when we sitting at a 50.0 fib level to the upside.

EUR/USD Weekly Chart

Looking at the daily chart it is obvious we touched the daily 5 earlier today and as expected price was forced downward, however, stochastics is in the oversold zone. We are within the Bollinger bands but we are nearing the lower band and it is not pointing down as of yet. Price could continue down a bit, hit the band and snap upward.

EUR/USD Daily Chart

Moving over to the 4 hour chart price has been riding the 5 ema down with the 13 stepping in when the 5 is breached with the 21 backing up the 13. A retracement to the 4 hour 13 ema could be a 90 pip move to the upside. Price has almost hit last week's low of 1.3384 within 10 pips which overlaps with the lower weekly Bollinger Band and appears like a double bottom could be developing. Moving over to the 15 minute chart I see that angle and seperation between the ema's is diminishing a bit and stochastics is in the oversold zone, lower Bollinger Band is pointing up so we may be in the beginning of a bullish retracement. Price has breached the Friday low but not enough so prevent it from rising back above it in a retracement. So, I maintain a bearish bias for this pair but an also open to bullish moves to the upside in a retracement move that can go as much as 90 pips to the upside.

EUR/USD Hourly Chart