Last Wednesday, our analysis ended with:
"Overall there is a bearish bias. The best opportunity seems to be a potential short off any reversal at around the key support/resistance level at 1.3250, which is also a psychological level. The next best thing looks to be a potential long off any reversal at around 1.3000, another psychological level with support. Otherwise, we are likely to grind down slowly, encountering support at the minor levels just below. We may well get a bounce up to 1.3200 or higher before we get near 1.3000."
Let’s take a look at the daily chart and see how things turned out
The prediction was correct insofar as we did grind down slowly and we did get a bounce up to 1.32 or higher. However we did not reach the minor support levels below 1.31, and we did not get a reversal at 1.3250 although so far price has not pushed far beyond that level. Overall, the prediction should have been enough to keep anyone out of trouble.
Looking to the future, let’s start by taking a look at the weekly chart
The week before last was a bearish reversal candle. This was then followed by a bearish week last week, but there was a bullish bounce from support at 1.31 which has continued to date. This level at 1.31 was not an obvious support level, but looking to the left we can see that it is within a bullish zone formed by a bullish bar inside a previous bullish reversal bar, so it is not very surprising that support was found somewhere in this area. Overall, the weekly chart is suggesting a weakly bullish bias, but with strong resistance overhead from 1.3400 to 1.3450.
Let's drill down and look at the daily chart:
We can see that there was a bearish reversal last Thursday, but it went nowhere, and its high at about 1.3225 was broken yesterday. At the time of writing, the price is above that level, it may act as near-term support now if price falls down to this level, giving a long opportunity. Apart from that, the daily chart adds little, except to emphasise more detailed lines of resistance overhead at approximately 1.34. For now, the daily chart, like the weekly chart, is signalling a weak bullish bias.
Overall there is a weakly bullish bias. The best opportunities look to be either a long off any bullish bounce off 1.3225 if that holds as support, otherwise if price rises to 1.34 this would be a great area to look for shorts. Should the price fall through 1.3225 soon, look instead for longs off 1.31, 1.3050 and just above 1.30.
The action in this pair is still quite week even though the summer is over. Yesterday the EUR got a bit of life from the news making armed conflict in the Middle East somewhat less likely, but aside from sentiment, this pair seems very dead. Keep an eye on the news, otherwise trade from levels while action remains slow, and don’t expect a huge amount of pips from any winning trades.