EUR/USD opened with a Gap over the weekend but managed to close the Gap moving on bullish bias for the first half of the week however failed to break above 1.2600 psychological resistance levels. All eyes were on EUR for Thursday’s ECB meeting where the ECB president Mario Draghi confirmed that the specific balance sheet target for the European Central Bank is the March 2012 level – €1 trillion injection. Furthermore, Mr. Draghi continued that additional unconventional measures can be used if prices remain low for a prolonged period of time.
For the week the pair found its resistance at 1.2576, made lower high and broke below 1.2430 support zone making a lower low as well at 1.2357 level however the pair again bounced back above its weekly support line of 1.2430. Breaking below 1.2430 support level could open the way towards 1.2300 monthly support zone and the anticipated 1.2000 psychological barrier.
On the daily chart, the price structure still remains lower peaks and lower troughs below both the 50- and the 200-day moving averages, and this keeps the overall down path intact. Overall the daily trend can be concluded as bearish however, at this given moment we would not advise entering short entries as we have bullish divergence on both of our indicators.
Expectations for the upcoming week (Nov 10th – Nov 14th):
From smaller time frame point of view, we can see the pair bouncing off the monthly 1.2300 psychological support zone. Especially given that Friday’s NFP figures came lower than expected, we may expect to see price retracement this week towards our monthly pivot line at 1.2635.
Resistance levels: 1.2500 (R1), 1.2600 (R2), 1.2635 (PP) and 1.2703 (R3)
Support levels: 1.2438 (S1), 1.2357 (S2) and 1.2307 (S3)