EUR/USD 4hr Chart Analysis
EUR/USD Last Week
EUR/USD started the week bound in a range between the 1.3355-1.3375 resistance area and the 1.3265-1.3285 support area.
On Wednesday price broke through the 1.3265-1.3285 and tumbled down for the rest of the week. As you can see on the image below price reached at all three of our support areas.
Going Long on EUR/USD
Buying EUR/USD could be tough this week. There is heavy resistance above last weeks close price at 1.3094. Remember resistance means Sellers so buying into large groupings of sellers can be very dangerous. There is a strong resistance area immediately above last weeks close at 1.3100-1.3125. This is followed by a minor resistance line at 1.3155 and then by another resistance area at 1.3185-1.3205.
All of this Resistance means taking a long trade early in the week could be very dangerous. Price may push up but there is no telling when Sellers will flood the market and turn the price around. In my opinion if you are going long early in the week you should aim for small and quick targets.
I have noticed in other EUR/USD analysis that many traders are ignoring the resistance at 1.3100-1.3125. I do see some merit to ignoring the 1.3100-13125 and the 1.3155 levels as they have been cleanly broken recently. However, I still think it would be wise to trade cautiously around these areas. The only reason the 1.3100-1.3125 was broken last week is because the Bears were extremely strong. The Bulls may not find it as easy to break these levels on the way back up.
Going Short on EUR/USD
EUR/USD has heavy Support below last weeks close price. The first support area on EUR/USD is between 1.3020-1.3050. This area held well last week and as you can see below it held well three weeks ago when price last approached it.
The 1.3020-1.3050 is backed up by a major psychological level at 1.3000 which was the low of of the major bearish move three weeks ago. This could be an extremely tough area to break as there are likely to be a lot of buyers from 1.3050 down to 1.3000.
I would not consider shorting EUR/USD until a clear break of the 1.3000 psychological level/three week low.
After the 1.3000 the next support area is at 1.2970-1.2945. Be aware that there is only 30 pips between the 1.3000 psychological level and the next support at 1.2970.
Ranging on EUR/USD
Considering how many major Support and Resistance hurdles EUR/USD needs to cross to move up or down it is possible that we will see a range. Despite last weeks large Bearish move EUR/USD has been ranging a lot over the last few weeks. I would not be surprised to see ranges resuming this week.
If EUR/USD does fall into a range between the 1.3020-1.3045 support area and the 1.3100-1.3125 resistance area I will be watching closely for reversal trades within the range.
Summary
It will be a tough week for both the Bulls and the Bears. On the short side the Bears face a major psych level and the three week low at 1.3000. On the long side the Bulls face a lot of sellers.
Given the challenge for both the Bulls and Bears they may find it easier to stay in a range between the two closest Support and Resistance areas.