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Technical Analysis – Charts of The Week

Trade Insights – EUR/USD pair has hit the Key resistance level at 118.95 and retraced below the Major Pivot of 118.40. Charts shows Viable long positions above the Pivot point to first retest the key resistance at 118.95 and if this level is broken with a strong candle, then a test of the Resistance zone at 119.70 to 119.90. Alternatively, possible short positions below 118.40 if another red candle is formed below the Pivot of 118.40, as sellers may first test the key support at 170.60 and then the support zone at 116.75 to 116.55.

EUR/USD

ECB Rate decision and EURO consolidating below the Pivot.

  • Resistance Zone: 119.70 to 119.90
  • Key Resistance Level: 118.95
  • Major Pivot Point: 118.40
  • Key Support Level: 170.60
  • Support Zone: 116.75 to 116.55
  • Last Analysis: Blue Vertical Lines
  • 200 Day EMA – Green Line
  • 50 Day EMA – Red Line

Trade Insights – EUR/USD pair has hit the Key resistance level at 118.95 and retraced below the Major Pivot of 118.40. Charts show Viable long positions above the Pivot point to first retest the key resistance at 118.95 and if this level is broken with a strong candle, then a test of the Resistance zone at 119.70 to 119.90.

Alternatively, possible short positions below 118.40 if another red candle is formed below the Pivot of 118.40, as sellers may first test the key support at 170.60 and then the support zone at 116.75 to 116.55.

EUR/USD Daily Chart

Chart Analysis:

Directional bias: 2 Week EUR/USD

The Blue Vertical lines indicate our previous analysis on the EUR USD pair. This shows that the prices have been range-bound since 17th June and are moving between the Support and Resistance levels. Today’s analysis of the chart shows that the pair is now just trading below the 50-Day EMA and 200-day EMA lines indicating a bearish bias of the market. If we look at the long-term chart pattern Starting from January this year, it shows the candles are forming lower peaks and lower troughs. This is also apparent in the shorter term 4 hourly chart. It seems the prices are in the downward leg and moving to test the Key support at 170.60.

The prices recovered sharply starting 20th August from the current support zone on the chart, and this was largely the result of the US NFP data and enthusiasm around it. But gains are shrinking now as traders are already anticipating headwinds arising from the ECB rate decision today on 9th September. 

If the Buyers manager to push the prices higher from here, then after moving above the Major Pivot at 118.40 the pair can test the Key Resistance zone at 118.95. After this upward change of the direction, it seems the prices could be stopped at the resistance zone of 119.70 to 119.90. Basically, 120.00 is strong cluster of resistance and a possible target for the Bulls. 

Whereas, if we must rely on our EMA lines, the long-term chart pattern, and the short term 4 hourly chart outlook then it seems prices could be dropped towards the Support zone at 116.75 to 116.55 incoming week or so, and with further weakness, the Bears could push the prices towards 116.00 level.

Fundamental Overview: NFP Data fuelled a short-lived rally on the EUR/USD pair and now investors are awaiting the ECB rate decision today. The meeting today will provide the direction the governing council will take. At the event hosted by TIME Christine Lagarde central bank is preparing to alter the direction of the monetary policy. This could change the market's Bearish Bias and fuel a Buying frenzy of the EURO taking it all the way up towards the peak of the January.

USD/JPY

  • Resistance Zone: 111.00 to 111.15
  • Key Resistance: 110.65
  • Major Pivot Point: 110.04
  • Key Support: 109.12
  • Support Zone: 108.57 to 108.37
  • Last Analysis: Blue Vertical Lines
  • 200 Day EMA – Green Line
  • 50 Day EMA – Red Line

Trade Insights – As the USD/JPY chart shows prices are moving in sideways for some time now, analysis depicts Viable Long Positions above the Pivot Point of 110.04, first targeting the Key resistance at 110.65 and then the Resistance zone at 111 to 111.15.

Alternatively, If the prices drop below the pivot of 110.04 then possible Short positions towards the first support level at 109.12 and then Sellers can continue to push the prices towards the support zone at 108.57 to 108.37.

USD/JPY Daily Chart

Chart Analysis: 

Directional bias: 2 Week USD/JPY

Since our last analysis on the USD/JPY, the pair has moved gradually higher, however it is shying away from testing the Key resistance at 110.65. Seems the Investors are waiting for some strong tailwind/headwind to find a decisive direction. The prices are trading above the 200-day EMA and 50-day EMA lines confirming Bullish Bias of the market.

However, it is apparent from the daily chart that the pair is forming lower highs depicting the struggle to break out of the sideways sluggishness. It is more likely that the prices can move upwards after touching the 110.04 Pivot point and test the first resistance at 110.65 and they quickly test the 111 Resistance zone. If Sellers gain control, then it could also show a sharp downward drop to retest the Key support at 109.12. Below this, the crucial support cluster is at 108.57 to 10837.

For now, the prices are consolidating and trying to stay above the downtrend line that we can draw connecting the previous 2 highs on the chart and it is important for the prices to stay above this level if the Buyers wants to remain in control.

Fundamental Overview: Fed Officials forecast 2 rate hikes for 2023 and FOMC minutes suggest the Fed reserve is preparing to switch gears, and it is very important as we move toward the end of the year with only 2 more meetings left after this month’s meeting on 22nd September. There are signs that future direction for rate changes could be set in the next few meetings and the Central bank can deploy a gradual exit strategy. Until, then it seems the Treasury yields could remain intact, and USD/JPY could hold above the key levels. 

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Disclaimer

The information provided is of a general nature and is not intended to be personalised financial advice. The information provided is not intended to be a substitute for professional advice. You may seek appropriate personalised financial advice from a qualified professional to suit your individual circumstances.

Trading in Rockfort Markets derivative products may not be suitable for everyone as derivative products may be considered as high risk. Please ensure that you understand the risks involved. A Product Disclosure Statement can be obtained here and should be considered before trading with us.

Vishal R

September 9, 2021

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