By Gabriel Ojimadu, Alpari
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On Monday the 11th of September, the euro/dollar rate closed down. The US dollar strengthened across the board thanks to a rise in US bond yields. Due to correctional movements and an empty economic calendar, buyers were beaten back to 1.1950. Now let’s look at Tuesday’s technical picture.
Day’s news (GMT+3):
Fig 1. EURUSD rate on the hourly. Source: TradingView
My predictions for yesterday were all correct. The euro/dollar rate slid to the 112th degree at 1.1955. The area from the 112th to 135th degree is a reversal zone. What’s more, the trend line runs through this area, which takes its starting point from the low of 1.1823 set on the 31st of August. The requirements for an upwards correction are all there. This isn’t a key line, however. The main line runs through 1.1900. I was expecting the euro to fall to this level.
The situation is unclear to me. It’s not easy to make a decision here. Cyclical analysis indicates a strengthening of the euro to 1.2000, while the pattern from October 2005 as well as the dynamics of the euro/pound cross point towards a slide. I went against the cycles and it seems this was a mistake. The euro rate has jumped to 1.1969. The UN has tightened sanctions against North Korea. Investors may once again retreat to the safe havens. In this regard, the situation is fairly simple. Should the price exit the downwards channel, my scenario for a slide won’t play out. Since there isn’t a bullish divergence between the price and the AO indicator, I’m expecting a new low today.
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