Technical Analysis of EUR/USD for January 3, 2024

Global and Economic Context:Middle East Tensions: The situation in the Middle East, particularly the strike in Beirut and its diplomatic repercussions, appears to have a limited impact on crude oil prices, suggesting that investors don't view it as a significant risk to oil supply.US Market Movements: The Nasdaq's decline and Apple's stock dip, influenced by a Barclays report, point to a broader tech sector sell-off. This, coupled with a stronger dollar and rising US treasury yields, reflects a shift in investor sentiment.US Dollar Strength: The dollar's substantial gains, despite weaker US manufacturing PMI, suggest robust investor confidence in the US economy, partially attributed to the IMF's positive outlook on the Federal Reserve's policies.EUR/USD Technical Analysis:Current Position: The pair reversed from 1.1140, moving towards a key Fibonacci level at 1.0932. Breaching this level could extend the downtrend.Resistance and Support Levels: Immediate resistance is at 1.1011, with support at 1.0942. A crucial short-term support level at 1.0724 remains pivotal for a bearish outlook.Indicator Insights:Trend Analysis: A bearish engulfing pattern suggests the continuation of a downtrend.Moving Averages: The pair is below key moving averages, indicating bearish momentum.RSI Analysis: The RSI below 30 hints at bearish momentum, though not in the oversold territory yet.Sentiment and Market Positioning:General Sentiment: Bullish sentiment dominates, with recent data leaning more towards bullish perspectives. The general sentiment on the scoreboard is bullish (62% vs.39% bears). Last week sentiment remains bullish as well (60%bulls vs.40% bears) while the last three days sentiment is bullish as well (58% bulls vs.42% bears).

Weekly Pivot Points:

Pivot Points are key price levels used in technical analysis to identify potential trend reversals, support, and resistance levels in financial markets.

WR3 - 1.10912

WR2 - 1.10607

WR1 - 1.10453

Weekly Pivot - 1.10302

WS1 - 1.10148

WS2 - 1.09997

WS3 - 1.09692

Weekly Time Frame Trading Outlook:

Bearish Pattern Emerge: A close examination reveals a Bearish Engulfing formation. This pattern often predicts a potential downtrend. Another candlestick pattern, the Shooting Star, further supports the bearish outlook.

Fibonacci and Moving Averages: The chart shows a reversal after the critical 78% Fibonacci retracement level was hit. Nevertheless, prices above the ADMA 55 and ADMA 100 suggest a prevailing uptrend.

Directional Movement Index (DMI): The DMI indicates bearish strength as the DI- line rises above the DI+ line. However, the ADX reflects a weak trend intensity.

Market Positioning: The EUR/USD pair is trading within an ascending channel. The current position, away from the upper and lower boundaries, indicates neither overbought nor oversold conditions.

Key Take-Aways for Long-Term Traders:Bearish Candlestick Patterns: The recent patterns warn of a potential short-term downturn.Trend Analysis with Moving Averages: Despite bearish signals, long-term trends remain bullish above moving averages.DMI and ADX Signals: The DMI suggests bearish control, while the ADX points to a weak trend, hinting at possible consolidation or range-bound movement.Conclusions and Strategies:For Bullish Traders: Maintaining positions above key supports and moving averages might align with the long-term uptrend.For Bearish Traders: A downturn could be anticipated, with a focus on breaks below moving averages for confirmation.Useful LinksMore Artcles InstaForex Course for Beginners Open Trading AccountImportant Notice

The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.

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