Last week EUR/USD went as high as 1.3322 but dropped sharply from there to touch 1.3155 and closed for the week at 1.3197.
Initially for the coming week we will stay neutral and will watch for the break below the support expected near 1.3120 and then 1.3080 to expect further downward move and on the upside any break over the expected resistance near 1.3280 to expect further upward move to retest the recent 1.3322.
Euro movements can be very sensitive to any new updates and hence change of sentiments from Euro region. A small change of sentiments can cause some unexpected volatile moves and hence a very careful approach is required while trading with EUR/USD and Euro crosses.
On the downside if a firm break takes place below 1.3080 then we would expect EUR/USD to retest the recent low of 1.3027 and any break below but more importantly 1.3020 and 1.3000 psychological level will change the near-term outlook to bearish. But even in that case we would expect frequent supports near 1.2960 and 1.2930. Any firm break below 1.2920 should lead the way towards 1.2840 support and possibly further down.
On the upside, if EURUSD manages a break over 1.3080, as mentioned above, we will expect a retest of the recent 1.3322. A break over this recent high will change the focus again towards upside and that should take EURUSD towards the resistance zone of 1.3430 to 1.3485 resistance zone. Please note that 1.3434 represents the Fibonacci 50% retracement of the above mentioned move. Not only this, but the range of 1.3430 to 1.3550 had proved to be a very strong resistance zone during November 30th to December 9th, 2011. The psychological resistance of 1.3500 would also come into picture at those levels. However a break above this will bring up the possibilities of a test to 1.3620.
You may also check the weekly eur/usd forecast/Outlook and daily euro/usd analysis at ForexAbode.
Other Techinicals:
1) ADX: Daily +DI line moved below -DI line once again and very weakly. There have been very frequent crossovers recently. ADX is well below 25 and is dropping (approx 12.00).
2) MACD: Daily MACD line remains over the signal line but started running flat with frequent touch downs with the signal line. Currently it is touching the signal line though has not moved below it as yet. 4-hourly MACD line’s last crossover signal was moving below the signal line.
3) Ichimoku Cloud: 2 weeks back Tenkan-Sen had crossed over Kijun-sen to give a weak bullish signal (you may please check our Ichimoku cloud page under technical analysis). The upward move had broken over the resistance of the upper edge of the cloud but then the price action, once again, had moved within the cloud. It found support well above the Kijun-sen level and moved above the cloud. Weekly closing was little above Tenkan-sen level. The gap between Tenkan-sen and Kijun sen has narrowed down. Over all the bullish configuration but indicating a loss of upward momentum.