EUR/USD Analysis – Week Starting May 13th 2012

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.

eurusd analysis last week

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.

eurusd analysis last weeks reversal

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.

eurusd analysis long trades

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.

eurusd analysis short trades

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.

Leave a Reply

Your email address will not be published.

14 thoughts on “EUR/USD Analysis – Week Starting May 13th 2012
  1. Thanks a bunch Nick. I started following your analysis a month ago and my trading has improved exponentially. Thanks for this weeks analysis.

  2. I have been shorting Eurusd off 1.3250 area sell off. While the H4 looks a bit nasty at the moment, the Daily chart reveals a simply short idea off the obvious cap of 1.2972 to which I don’t see eurusud returning until a potent low has been made! Even the H4 shows a clear bearish move off the said 1.2972 after breaking down the recent descending triangle. I secured another short at 1.2931 on friday and am happy to let it run until 1.2810 with a 50 pip stop.
    With the Daily, it is easy to see that the famed 1.2880 area ‘support’ is not really that terrible. Any bounce off it on intraday basis is a platform for loading up more shorts in my case.
    Only at or arund 1.2800 does it make sense to long. Until then, I will be short.

    1. I agree that EUR/USD will probably fall over the long term. However, as I always say my analysis is purely for intra day trading.

      Some of my support and resistance areas lose their significance on higher time frames. 

      I will be making a post tomorrow or on Monday about longer term shorts on EUR/USD.

      1. Thank you Nick.  Do you pay any significant attention on economic news out of Europe?   Plamen

        1. I pay attention to it but I do not let it impact my trading too much. There are so many differing opinions in the media. If you listen to everyone you may as well never enter a trade.

  3. Awesome Nick. I agree on the support zone. I’m a pattern trader and I see a reversal pattern forming with a confluence area bet 2869-2875. So I”m going to tray a long at 2973.

    1. Sounds like a plan. I would not be surprised if EUR/USD moves up but honestly my bias is still short.