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EURUSD Weakness - Short Position Long Term

Short
FX:EURUSD   Euro / U.S. Dollar
EURUSD Weekly Chart - Medium to Long Term Bearish Outlook

EURUSD is at a 13 month low. It is currently resting at the 50% fibonacci level. Analysis points out that a trend reversal at this stage is not likelyTh and continued declines at or below the 61.8% fibonacci level are expected. However, a short term blip at the current 50% level may occur before continuing the downward trend.

The downward trend is expected to continue as the RSI has broken the key support line since previous 13 month low. The RSI looks to continue to fall to the 30 line. The Momentum indicator also highlights the support line which is a crucial test for the pair. If the currency pair breaks through the support line, it is likely that a test of the 100% fib line will occur.

Also interesting but not incredibly helpful, is that the pair has outlined a head and shoulders pattern, indicating that decline is likely foreseeable but doesn't provide much guidance to where it will land.

At this stage, conservative analysis points to a decline at the 61.8% fib level. This represents around a 240 pip/point profit trade with the take profit just before the 61.8% line. If the pair breaks the 61.8% line, expect a complete re-tracement.

This position is a medium to long term position with a time range between 3 to 9 months.
Comment: 50% Fib broken, now a test of the 61.8% Fib support. Currently represents a strong 200 pip short sell trade. Be aware that the 61.8% Fib is a crucial support line. A break of the 61.8% will more than likely result in 100% or more re-tracement.

More updates on the EURUSD pair will follow in due course.
Comment: Its broken the 50% Fib, my outlook has changed from conservative bearish to aggressive bullish.

50% Fib had little hesitation before a continuation in the down trend, expect a sudden move to 61.8% Fib line in the next week or so.
Trade active: Although it looks to go lower, be prepared for a bullish reversal as the US dollar index DXY is poised to move lower, putting upward pressure on all major X/USD pairings.
Trade active: EURUSD is poised to drop below the 50% Fib line given that aggressive contractionary monetary policy by the US Fed will continue to tighten further this year as well as expected 5 interest rate hikes next year.

USD denominated currencies will severely weaken especially GBPUSD and EURUSD given the EUR and GBP have relatively low interest rates and the burgeoning Brexit disaster is unquestionably going to drag it even lower.

This is a good one to trade on short term (1-2 weeks), as Brexit developments and the now hopelessly inefficient Italy crisis is pushing markets quite strongly.

Comments

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