A more technical look at the markets from InterTrader
After a massively bullish session during Friday trading, risk sentiment came back into play, boosting the EUR/USD all the way up to $1.2390.
Yesterday (Monday), the pair pulled back but managed to regain most of what it lost and it is currently hovering around the resistance level at $1.24.
In the absence of any good news regarding the Eurozone debt crisis, it looks like the spread betting markets are either pricing in more easing coming from the Fed in September or they are just happy with the ECB stance.
This divergence between risk appetite and the fundamental outlook however, seems to be more based on hopes and speculation and is not likely to last long.
The pair is currently at a major resistance area all the way up to $1.27.
Unless the pair gets above the top of the resistance, there seems to be no reason to buy the euro, as it is hard to believe that everything is ok with the European debt problems.
Euro – Dollar Analysis Chart
Currently, the bearish alignment of the 20 EMA below the 50 EMA is still in place since the end of April and the MACD signal line is well below zero, as shown on the daily spread betting chart.
This technical set up seems to be reinforcing the bearish outlook on the pair.
Considering the low volumes due to the summer vacations, lower volatility and sideways trading could be the order of the week.
Once the market gets back into speed again, we could see the pair gapping straight back down, opening the door for the major support level at $1.2071.
Be aware of the $1.2566 level, as it could bring a lot of sellers.
Good luck and happy trading
Dafni Sedari, InterTrader
(Original article written 07 August 2012).
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