EUR/USD Forecast Review 28 May 12 3



 

Good day forex traders.

 

Welcome to another weekly EUR/USD forecast by yours truly, The Forex Koala ! TFK :)

 

In the previous EUR/USD forecast we noted a late week bullish correction to test the 1.28 region. Having said so, the bearish momentum remained strong and the test of 1.26 remained a possibility. Risk aversion was indeed strong and the S&P 500 had since dropped a fair bit. Nothing encouraging was coming out of the Euro Zone for now.

 

EUR/USD chart

 

Technical Analysis 

Looking at the EUR/USD chart above, we noted that 1.26 was hit. I LOVE IT WHEN MY TARGETS WORK! fanfare fanfare

SMA 20 = Bearish

SMA 50 = Bearish

There is no indication of any technical bullish correction although nothing is impossible. Just wanted to warn the LONG supporters that you must know what you are doing if you want to trade against the trend. Nonetheless, any bullish moves will probably seek to test 1.26 first.

Should the bearish momentum continue, i expect a test on the previous 2009 March low of 1.2450+/- first before the currency pair marches on to 1.24.

 

Fundamental Analysis

It seems for now that the German Chancellor, Angela Merkel may be open to a compromise towards the combined Euro Zone bond concept. To folks who are not familiar with this, this basically means a combined bond issuance so that with the backing of better Euro Zone economies such as Germany, the interest demanded will be lower thus offering “rolling in the deep” countries such as Greece a cheaper financing means.

While this should sound encouraging, we all know how difficult it is to come to consensus when it comes to the Euro Zone. After all, this means higher costs of borrowing for Germany and hence just how this compromise will work remains a mystery. Something the markets probably saw little of for now.

Greece’s poll looms closer at June 17 and in the meanwhile, Spain continues to struggle with heightened bond interests.

Over in the US, the S&P 500 remains near the technical support of 1300. A unofficial sentiment index for me, it seems like risk aversion is still plaguing the markets.

Monday is a bank holiday for a number of countries including the US and hence we may see low volume conditions.

Trade Safely.

 

Related Forex Articles from the Koala Forex Training College.

VN:F [1.9.22_1171]
Rating: 5.0/5 (1 vote cast)
EUR/USD Forecast Review 28 May 12, 5.0 out of 5 based on 1 rating
  • http://thegeekknows.com/ The Forex Koala

    Is everyone ready for a new trading week? 

    Do support us. We need you to share us on social networks and link to us if you participate in forums or have a website !

  • http://www.facebook.com/george.mccall.5 George McCall

    Looking at the daily chart, Friday’s candle definitely was an inverted hanging man. This is only a bullish signal if confirmed. Confirmation will not happen if the price action breaks below the low made on Friday which was 1.24948. For confirmation to happen the close of Mondays candle must be above the close of Friday’s candle which was 1.25139. Only if this were to happen would there be any justification in taking a long position. There is a descending price channel which is a bit messy at best. Certainly the downward momentum of the last four days has abated and it maybe that there is an absence of further pressure to the downside. However as we stand there is no signal to go long and that activity should be restricted to the brave or foolhardy. If may be that Monday’s daily candle gives a long signal. Thus I am flat and will not open any long term positions until I get a clear signal. On Monday my trading will be limited to some scalps and nothing held into Tuesday. Going short at this level is not the best idea and there really lacks any decent risk:reward.

    I attach a copy of my daily chart. The first thing is that Ichimoku is showing a strong down trend. Whilst the price action is less than 200 pips from Tenkan Sen, it is well over 300 pips from Kijun Sen. Thus the train has well and truly left the station and any entry now would be merely chasing the trade. All the other signals are bearish. Tenkan Sen is below Kijun Sen, The price action is below the cloud which is bearish since Senkou Span A is below Senkou Span B. Chinkou Span is well below the price action with 100 pip clearance for more than the next seven sessions. Ichimoku is primarily a momentum indicator and clearly there is strong momentum to the short side.

    The MACD is clearly indicating that short positions should be held. The MACD line is below the signal line and for a long signal, there needs to be a crossover. RSI is reading 22.57 which does indicate that the market is heavily oversold and that there could be a potential for a reversal. It is that reversal which I am looking for though at present there are no real reversal signals. 

    • http://thegeekknows.com/ The Forex Koala

      On behalf of all, thank you for your detail analysis!

      P/s I think it’s a forex gap up that I see there. Interesting ..