FX.co ★ Technical Analysis of EUR/USD for January 5, 2024

Pre NFP-Payrolls EUR/USD Trends: A Forex Analysis for January 5, 2024

Key Takeaways:

1. Bearish Short-term Signals: The presence of a Bearish Engulfing pattern and RSI levels suggest short-term downward momentum for EUR/USD.
2. Long-term Trends Remain Bullish: Despite bearish indicators, the long-term trend above key moving averages hints at an overall bullish sentiment.
3. Critical Levels to Watch: Key support and resistance levels offer crucial insights for potential trend reversals or continuations.

Fundamental Analysis: Economic Data Impact

Today's economic calendar presents significant data impacting the EUR/USD pair. Early in the day, the Euro Zone will release inflation data. The Core CPI is expected at 3.5% y/y, slightly lower than the previous 3.6%. This data could influence the Euro's strength.

Later, focus shifts to the US labor market with the anticipated NFP report. A forecasted decrease in employment growth and a slight rise in the unemployment rate may affect the USD's value.

Technical Market Outlook: Bearish Signals Emerge

Currently, EUR/USD trades at 1.0910. Economic indicators and the Composite PMI below 50 suggest a recession in the Euro Zone, potentially weakening the Euro. Conversely, the Federal Reserve's stance may soften the USD.

Indicator Insights: Interpreting Technical Patterns

• Bearish Engulfing Pattern: A red candle engulfing a preceding green one, indicating potential trend reversal.
• Moving Averages: With the DEMA below the EMA and prices below both, a bearish trend is suggested.
• RSI Analysis: At around 34.73, nearing oversold conditions, indicating possible trend pause or reversal.

Sentiment Analysis: Contrasting Views

Despite bearish technical indicators, the sentiment scoreboard shows a bullish majority. This contrast requires a cautious approach.

Pivot Points: Key Levels for Traders

• Resistance Levels: WR3 at 1.10912, WR2 at 1.10607, WR1 at 1.10453
• Support Levels: WS1 at 1.10148, WS2 at 1.09997, WS3 at 1.09692

Long-Term Trading Outlook: Mixed Signals

• Bearish Candlestick Patterns: Indicate possible short-term downturns.
• Moving Averages: Suggest a continuing long-term uptrend.
• DMI and ADX: Point towards bearish control but weak trend intensity.

Conclusion: Navigating the Market

Bullish traders should watch for sustenance above key support levels in line with the long-term uptrend. Bearish traders might anticipate a downturn, looking for breaks below moving averages as confirmation. Always consider both technical and fundamental factors for a holistic approach to trading.

Useful Links

• More Artcles
• InstaForex Course for Beginners
• Open Trading Account

Important 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.

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.

#instaforex #analysis #sebastianseliga