Intraday Market Analysis: Euro Dollar Versus the Bulls

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EURUSD Intraday Trading Strategy

Following the FOMC statement EURUSD suffered from heavy losses in the Forex market. EURUSD was able to post a remarkable recovery due to the US Advance Gross Domestic Product (GDP) but we fear the intraday downtrend was already established.

EURUSD 4hr Chart

Please click on the chart to enlarge:

The bearish flag in Euro Dollar 4hr chart has been affirmed and will be used to generate the signal in the market. The recovery appears to have been triggered by a positive divergence in the technical indicators but may be overruled by the flag. There are 2 possible entries that may only be affirmed by a 4hr re-test.

1.0997 is the initial resistance that must be tested in order to indicate it is has required strength to prevent the bulls from driving the price higher. If 1.0997 holds upon a successful re-test the downtrend is expected to resume, targeting 1.0850. Although the flag pole suggests deeper losses in EURUSD we prefer opting for a more conservative target.

If EURUSD is able to take out 1.0997 following an unsuccessful re-test, the lower line of the flag (in black) will act as the next key resistance in the market. A successful re-test of the lower line of the bearish flag may initiate the weakness as part of the bearish flag’s resumption of the downtrend. We suggest paying attention to the 44 Moving Average (MA, in grey) as it may continue to trend lower and act as a possible resistance aside 1.0997 and the lower line of the flag. In order to nullify the bearish flag EURUSD must break above 1.1095. Friday’s session is expected to be fairly active in the European session due to economic data that is scheduled to be released from the euro zone.

30/10/15 UPDATE: EURUSD has initially re-tested 1.0997 and reversed lower by approximately +30 pips. The market then broke above the resistance that lead to stronger gains towards the latter resistance we mentioned in this strategy. The 44MA continued to trend lower, acting as a strong resistance.

Please click on the chart to enlarge:

The latter resistance is being tested by the market, the 4hr close is due at the London close.

01/11/15 UPDATE: Following the retest of the latter resistance that we mentioned in our EURUSD intraday strategy the price has retraced lower.

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We should highlight that 1.0997 is now acting as a support level and has been re-tested by the market

03/11/15 UPDATE: EURUSD succeed in closing below 1.0997 (support), which to lead to further selling in the market.

Please click on the chart to enlarge:

We have made note of the hammer that was painted in the chart. It is often a viewed as a warning signal as opposed to a fresh entry. EURUSD must break below the hammer to affirm the downtrend. By the book, short traders tend to shift their stops above the hammer.

04/11/15 UPDATE: EURUSD resumed its intraday downtrend in the Forex market without breaking above the hammer.

Please click on the chart to enlarge:

A potential support level may have been found at 1.0990 where a break below may send EURUSD towards our target. If the support holds at the 4hr close corrective gains may be seen and EURUSD may miss our target.

04/11/15 UPDATE II: EURUSD has acquired our bearish target.

Please click on the chart to enlarge:

Please note we have corrected the target that was displayed in prior charts to 1.0850 as this was our target for EURUSD.

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Last Updated on November 4, 2015