EUR/USD 4hr Chart Analysis
EUR/USD Last Week
Last week was full of surprises. The first surprise came when the market opened with a 71 pip gap, the largest gap this year. Buyers then made a brief attempt at filling the gap but were unsuccessful. The Bears surprised us again when they took control of price and smashed through the 1.3000 psychological level with ease.
It looked as if nothing would stop the sellers but then they approached our support area at 1.2950-1.2970. The 1.2950-1.2970 caused an immediate flooding of buyers into the market reversing price and starting a Bullish trend. The Bulls controlled the market for the rest of the day pushing price up to the 1.3040-1.3060 resistance area.
The 1.3040-1.3060 resistance area proved to strong for the Bulls and it sparked off a Bearish reversal. I traded this reversal and made +34 pips out of it. You can watch the live trade video here. One of my students in the Forex Mastermind made more than double on that same trade when she bagged 85 pips.
The Bears pushed price back down to the 1.2950-1.2970 support area. After a bit of a struggle they managed to break through support but they did not get too far. Price spent the rest of the week bouncing from the 1.2900 psych level and 1.2950-1.2970 resistance area.
Long Trades on EUR/USD This Week
EUR/USD has very little room to move up. Just 35 pips above last week close of 1.2915 the 1.2950-1.2970 resistance area starts. This resistance area has held very well as support for most of this year and it will probably act as strong resistance.
Right above the resistance area is the 1.3000 psychological level. While this level was mostly ignored at the start of last week it did impact price towards the end. I am not counting the 1.3000 level out, I think it could act as resistance next week. Especially if the Bulls are weakend by pushing through the 1.2950-1.2970 resistance area first.
If price clear the 1.3000 the next resistance area is at 1.3040-1.3060. This area held very well last week so be careful around it.
Short Trades on EUR/USD This Week
Unfortunately EUR/USD also has little room to move down. Only 15 pips from last weeks close at 1.2915 we have the 1.2900 psychological level. The 1.2900 acted as strong support towards the end of last week so price may struggle to break it again.
The next major support area is at 1.2860-1.2880. The 1.2860-1.2880 has not been hit in three months but it is a strong support area. If the Bears make a move down I will definitely be looking for signs of reversal at the 1.2860-1.2880.
If price clears the 1.2860-1.2880 the next major support area is at 1.2780-1.2800.
Ranging on EUR/USD
I do not see any good opportunity for ranging on EUR//USD this week. The price could possible range between the 1.2950-1.2970 resistance area and the 1.2860-1.2880 support area. However the 1.2900 psychological level that sits in-between these two areas could cause problems.
Summary
There is a lot of support and resistance surrounding last weeks close price of 1.2915. This will make it hard to enter any trades early on in the week. If you enter short you may find your trade held up at the 1.2900 psychological level or the 1.2860-1.2880 support area. If you go long you might find your trade held up at the 1.2950-1.2970 resistance area or the 1.3000 psychological level.
The good news is that tight ranges often cause break outs so we could see a good breakout this week. However, you cannot enter a trade and simply hope for a breakout. I am staying out of EUR/USD until it finds it’s way out of this messy range. In my opinion there is too much uncertainty on EUR/USD at the moment.