What Will EUR/USD Do This Week
I have had a lot of Facebook messages from people asking me what EUR/USD will do this coming week….. will it go up or down?
Well, some analysts are saying EUR/USD is heading up to 1.3500. However, other analysts are saying EUR/USD has topped out and it is heading down. Personally I do not know or care what EUR/USD is going to do. I am going to prepare for both eventualities and take some trades whatever happens.
I see a lot of speculation from analysts in the Forex market but the truth is nobody knows exactly what the price will do. My advice is to stop worrying about what is going to happen and just trade when it happens. You should assume nothing and prepare for anything, if you prepare for every eventuality there will be no surprises.
So let’s get into the analysis. I am going to cover EUR/USD from every angle, so you can be prepared, whatever happens.
EUR/USD Last Week
The Bears started strong by pushing down and testing the previous weeks support at 1.3200. However, the Bulls quickly countered and pushed price back up through the 1.3265 resistance area and the 1.3300 psychological level. Eventually the Bullish move was stopped at the 1.3355 resistance area. After this EUR/USD fell into a range between the 1.3355 resistance area and the 1.3265 support area.
Almost everything that happened last week was a repeat of the previous week. If you look back to last week’s analysis you will see what I mean.
Going Long on EUR/USD
EUR/USD is going to start the week near to a very strong Resistance area at 1.3355 – 1.3375. The resistance area was tested three times last week and the Bulls failed to significantly push through all three times. The more a Support and Resistance area is tested the weaker it gets. However, like last week the resistance area is backed up by an important psychological level at 1.3400.
I know many traders are considering going long on EUR/USD but going long too early can be dangerous. Last week we saw a perfect example of why you shouldn’t go long too early. On the chart below you can see that last week price opened on top of the 1.3265-1.3285 resistance area. Some people went long as soon as the first candle of the week pushed up. However, the price had not cleared the resistance area or the 1.3300 psychological level. So instead of price continuing up the Bears took control and pushed the price down. The large bearish move stung a lot of traders who bought too early.
History could repeat itself this week. Taking a long trade before price clears the 1.3400 psychological level could be a very risky move.
If the 1.3400 is broken the next resistance area starts at 1.3470 so you might want to consider that level as an initial target.
Going Short on EUR/USD
On the short side the 1.3265-1.3285 support area held well throughout last week. The support area is strong so if you are going short early in the week be mindful of it.
You should also be mindful of the minor Support line at around the 1.3330, the orange dotted line on the chart. This line caused a lot of choppiness last week and made it almost impossible to take good short reversals from the 1.3265-1.3285 resistance area. Going short in the vicinity of the 1.3330 could be risky as price can become erratic around it.
If the 1.3265-1.3285 support area is broken the next support area is at 1.3185-1.3205.
Ranging on EUR/USD
If we see a repeat of the last two weeks EUR/USD may break through the 1.3400 on Sunday or Monday. If this happens EUR/USD could fall into a range between the 1.3470-1.3490 resistance area and the 1.3355 – 1.3375 support area. A range like this should give us many reversal trade opportunities.
Buying EUR/USD before it breaks 1.3400 might be risky. There are plenty of sellers between 1.3355-1.3400 and it will take a lot of power for the buyers to get through the area. On the short side EUR/USD is facing a minor support line at 1.3333 that caused a lot of choppiness last week. below that is the 1.3265-1.3285 support area which held well last week. Going short before the 1.3265-1.3285 is cleared could be a risky venture.
If we see a repeat of the past two weeks EUR/USD might fall into a range. So your eyes opened for signs of ranges forming between two Support and Resistance areas….More at EUR/USD Weekly Analysis (Wk Strt 1st April 2012) the market so I ended up entering a reversal. The trade lasted for over 12 hours, I opened it at 3:00 and closed at around 17:00 on my phone. As the trade was closed via my phone I did not record the end of the trade. I did add a part to the end explaining how the trade worked out.