Weekly
• Last Candlesticks pattern: Shooting star
• Time of formation: 03 May 2016
• Trend bias: Down
Daily
• Last Candlesticks pattern: Shooting star
• Time of formation: 3 May 2016
• Trend bias: Sideways
EUR/USD – 1.0581
Euro’s selloff after running into strong resistance at 1.0906 signals top has been formed there and consolidation with mild downside bias is seen for weakness to 1.0525 support, however, a daily close below key support at 1.0493 is needed to confirm early erratic rise from 1.0340 low (this year’s low) has ended at 1.0906, bring further fall to 1.0440-50 and possibly towards 1.0390-00 but said support at 1.0340 should remain intact.
In view of this, would not chase this fall here and would be prudent to sell euro on recovery as 1.0665-70 should hold from here, bring another decline. A daily close above the Kijun-Sen (now at 1.0716) would abort and suggest first leg of decline from 1.0906 has ended instead, risk a stronger rebound to 1.0765-70 but upside should be limited to 1.0800 and price should falter well below 1.0870-75, bring another selloff later this month.
Recommendation: Sell euro at 1.0670 for 1.0500 with stop above 1.0770.
On the weekly chart, euro’s selloff from 1.0906 formed two consecutive black candlesticks and price broke below indicated support at 1.0600 last week, adding credence to our view that top has been formed there and consolidation with mild downside bias is seen for weakness to 1.0525. Looking ahead, only a break of indicated pivotal support at 1.0493 would signal the rebound from 1.0340 has ended at 1.0906, bring further fall to key support at 1.0454, a sustained breach below this level would provide confirmation, then further fall to 1.0390-00 and later retest of this January low would follow.
On the upside, expect recovery to be limited to the Tenkan-Sen (now at 1.0700) and brig another decline. Above 1.0730-40 would bring test of 1.0780, however, reckon upside would be limited to 1.0825-30 and price should falter well below said resistance at 1.0906, bring another decline later. Only a break of 1.0906 would revive near term bullish view for the erratic rise from 1.0340 low to bring retracement of recent decline to 1.0930-35 (61.8% Fibonacci retracement of 1.1300-1.0340) and possibly 1.1000, however, reckon upside would be limited to 1.1050-60 and price should falter below 1.1100-10, risk from there is seen for a retreat to take place later.
