Technical Analysis of EUR/USD for February 5, 2024

Morning Brief:A week filled with surprises has concluded, marked by quarterly stock reports, the Federal Reserve's decision, and strong non-farm payroll data. The result is a robust global market sentiment all across the board.

The highlights were the impressive performance of technology companies, a solid labor market report, and the Federal Reserve tempering expectations for quick interest rate cuts. This spurred further gains on Wall Street and moderately strengthened the dollar.

The U.S. seems distant from recession fears, which dominated last year. Even if the January labor report is an anomaly, strong PMI and ISM data, coupled with excellent results from tech companies, suggest a healthy economy.

Technical Market Outlook:

The EUR/USD pair reversed from 1.0898 after the payroll data release, nearing last week's low around 1.0768. A break below could target the 1.0743 - 1.0723 range, a significant demand zone for bulls. The 61% Fibonacci retracement level at 1.0733 also emphasizes this zone's strength. Intraday support is at 1.0768, with resistance at 1.0797. The negative momentum on the H4 chart indicates a short-term bearish outlook.

EUR/USD H4 Time Frame Technical Insights:Price Action: The latest candles indicate indecision, showing a tug-of-war between buyers and sellers.Bearish Engulfing Patterns: These patterns suggest a shift from bullish to bearish sentiment.EMA and DEMA: Current prices below the 100-period EMA and the 50-period DEMA indicate a bearish medium-term trend.RSI: An RSI below 40 suggests bearish momentum, with the market not oversold.Pin Bar: An earlier bullish pin bar hinted at an upward reversal, but this was not confirmed by subsequent price movements.

EUR/USD H1 Intraday Indicator Analysis:

Sentiment Scoreboard:The overall sentiment is bullish (56% bulls vs. 44% bears). Last week's sentiment remained bullish (55% bulls vs. 45% bears), while the past three days are neutral (56% bulls vs. 44% bears).

Weekly Pivot Points:WR3 - 1.08147WR2 - 1.07958WR1 - 1.07870Weekly Pivot - 1.07769WS1 - 1.07681WS2 - 1.07580WS3 - 1.07391

EUR/USD Bullish Scenario:A reversal from the current support could lead to an upward move towards the 50-period DEMA and 100-period EMA. RSI divergence, if it occurs, could signal a weakening bearish momentum and a possible bullish reversal.

EUR/USD Bearish Scenario:A decisive break of support, marked by a strong bearish candle, may indicate a continuation of the bearish trend towards the next support level or the marked minimum. Rejection of upward movements by the 50-period DEMA or 100-period EMA could reinforce the bearish outlook.

Conclusion and Trading Insights:

Traders should monitor the EUR/USD pair for signs of a reversal or continuation of the current trend. Bulls might look for opportunities if the price respects the current support, while bears may anticipate a further decline if support levels are breached. However, traders should be aware of the risks and manage their positions accordingly, as market conditions can change rapidly.

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.

Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.

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