FX.co ★ Analysis and forecast for EUR/USD on April 12, 2021

Trading on April 5-9 certainly can not be called successful for the US dollar, which declined against all major competitors, except for the British pound. For example, the single European currency gained 1.22% in value against the dollar and became the second in the list of strengthened currencies after the Swiss franc, which rose by 1.80%. A week earlier, it was already suggested that several major currency pairs have formed (or are forming) reversal signals, and not in favor of the US dollar, but on the contrary, signaling that the strengthening of the "American" has ended, and a change in the trend is planned. It is characteristic that the dollar was not supported by either a rather optimistic speech by Fed Chairman Jerome Powell, in which he positively described the pace of recovery of the US economy from the consequences of the COVID-19 pandemic, or macroeconomic statistics. However, it should be noted that last week the data from the United States came very mixed. Although, in my personal opinion, the matter is not the macroeconomic indicators, but the technical picture, to the analysis of which we immediately proceed.

Weekly

As usual, on Mondays, we will summarize the results of the week that has ended and try to determine the price direction of EUR/USD at the auction of the five-day period that has begun. For those who have read and remember the review of a week ago, the author drew attention to the outlined candlestick with a long lower shadow, which can be characterized as a reversal pattern of the "Hammer" candlestick analysis. Given this factor, the EUR/USD was expected to grow, which eventually took place. The "Hammer" model was strengthened by the closing price above 1.1700 and the strong technical level of 1.1745, as well as the blue 50 simple moving average, which actively supports the price. Thus, the attempts of the bears on the euro/dollar to start the pressure on the exchange rate were immediately stopped by 50 MA, from which the pair began to rise. As a result, a very impressive bullish candle has formed on the weekly chart, however, some points should slightly alert those who expect the subsequent strengthening of the quote. One of these is the closing price of the last weekly candle below the very important level of 1.1900 for the market. However, even passing up this mark does not guarantee a cloudless life for euro bulls. Note that at 1.1975, the red Tenkan line and the blue Kijun line of the Ichimoku indicator merged. I would like to note that the mark of 1.1975 in itself is quite strong. Well, the Tenkan and Kijun lines will certainly strengthen it. Another very significant point is that the resistance level passes at 1.1990, and the most important psychological level of 1.2000 is slightly higher. Thus, we can conclude that in the price zone of 1.1975-1.2000, the euro bulls may face big problems, and meet very strong resistance from sellers. I dare to assume that this is where the future fate of the EUR/USD pair will be decided. Naturally, this will only happen if the designated zone is reached. The bears will regain full control of the pair only if there is a true breakdown of 50 MA and the level of 1.1700, with a mandatory consolidation below this mark. In my subjective opinion, there are no more prerequisites for continued growth, at least in the area of 1.1975-1.2000. For the bears, the task looks much more difficult, especially given the change in market sentiment, which at this stage of time is not in favor of the US currency.

Daily

On the daily chart, the technical picture has a more curious and mysterious look. Well, let's figure it out. With confidence, we can distinguish two strong support levels - 1.1860 and 1.1835. At the same time, the last level, along with the 200 EMA, previously represented resistance, but during the market's testing of the circled reversal model of the "Morning Star" candle analysis, they were confidently broken through. Looking at the maximum values of the last three daily candles, we can conclude that the current and fairly strong resistance is concentrated in the area of 1.1914-1.1927. However, even the census of the April 8 highs at 1.1927 will not give full confidence in the further bullish scenario. The fact is that at 1.1955 and 1.1968, there are 89 EMA and 50 MA, respectively. At the same time, each of these moving averages is quite capable of providing strong resistance to the quote and provoking at least a good rebound down.

Trading recommendations for EUR/USD:

Given the technical picture that has developed on the weekly and daily charts, it is difficult to call it fully unambiguous. Based on this, I recommend considering both purchases and sales of the pair, while the main trading idea, at the moment, is still represented by purchases. You can take a closer look at the opening of long positions after the price drops to 1.1875, 1.1860, and 1.1840. It is recommended to open sales when bearish candle signals appear in the area of 1.1900-1.1930 on the daily, four-hour, and hourly charts. At more interesting prices, we consider opening short positions in the presence of the same signals and the price range of 1.1955-1.2000. That's all for today. Tomorrow, we will consider smaller time intervals, and if necessary, we will adjust today's recommendations.