In Focus: Analysis of transactions for a EUR/USD pair during the week

By analyzing the transactions report for the period from 06.07 to 13.07, you can follow the obvious change of the EUR/USD pair’s trend. Let’s consider in detail the reasons that influenced the trend change.

Fig. 1. EUR/USD Chart

Starting the analysis from July, or rather since July 2, this pair is traded exclusively in an uptrend, which was caused both by the persistence of pessimism for the dollar, and by the weak report on US employment. The actual level of the EUR / USD pair’s reversal was level 1.1780, which corresponds to the Fibo correction level 78.6 from the high of June 14 to the low of June 21. This collapse of the euro was caused by the comments of the ECB regarding not being ready to raise rates in the euro area until the summer of 2019.

Fig. 2. EUR/USD H4 Chart

It is worth noting that the first transaction for July 6-9 is closed in positively. Then a correction followed.

The second deal for July 10-11 closed negative. The deal was opened on a rebound from the lower boundary of the upward channel. And based on the resumption of the uptrend. In turn, the closure of this deal on the stop has called into question the safety of the upward trend of early July.

On the other hand, the return to 1.1680, the Fibo correction level of 50.0 from the high of June 14 to the low of June 21, indicated the formation of a new downtrend, which was also broken early next week.

In turn, over the past two weeks, the pair EUR/USD has formed a descending channel, which is put in the framework of the decline of the end of June and is limited to support levels: 1.1610 and 1.1640.

Fig. 3.  EUR / USD Chart

This leads to thoughts of a correction against a downtrend. Above mentioned support: 1.1610 and 1.1640 acts as a reversal zone. But also it is worth remembering that the trade will be carried out against the trend, which means with understated goals, because of the possible resumption of the downward trend.

The levels of significant resistance in this model are zone 1.1680-1.1700. The turn to which will indicate the preservation of a two-week downtrend and will open the way to support levels 1.1580 and 1.1550.

Risk factors that could affect the dynamics of the EUR/USD remain risks associated with US foreign policy, and data on tightening monetary policy in the US. As a result, volatility may increase or the expected model of pair movement may be refracted.

More about the views on this pair and not only can be found in the Expert Opinions. Also follow the Trader’s Blog.

Anton Hanzenko