FX.co ★ Technical Analysis of EUR/USD for January 12, 2024

Decreased EUR/USD Dynamics Amidst Key Economic Events

Today's focus in the Forex markets is on a slew of economic data releases and speeches from central bank figures. Notably, CPI inflation data from France and Spain, PPI data from the US, and speeches from ECB and FED representatives are set to influence market sentiments. Additionally, Wall Street's quarterly results are poised to impact broader financial markets.

Start of the Q4 2023 earnings season:

Bank of America (BAC) - before the session

Citigroup - before the session

JPMorgan Chase & Co. (JPM) - before the session

Wells Fargo & Company (WFC) - before the session

BlackRock (BLK) - before the session

EUR/USD: A Calm Before the Storm?

The EUR/USD pair has been trading within a narrow range, indicating a period of consolidation. The pair oscillates between 1.0877 and 1.0999, with immediate resistance and support at 1.1021 and 1.0877, respectively. Currently positioned just below the 100 MA on the H4 chart, the pair awaits a fundamental catalyst to spark volatility.

Key Indicators Shaping the Market Outlook

1. Bearish Engulfing Pattern: Suggests a potential trend reversal, indicating that sellers might be gaining control.
2. Hammer Candlestick: Typically a bullish reversal sign, but its impact seems limited currently.
3. Moving Averages: Both 100-period EMA and 50-period DEMA point downwards, suggesting bearish momentum.
4. Relative Strength Index (RSI): At 42.78, indicating bearish momentum without being oversold.
5. Support and Resistance: The pair is in the middle of its range, with a breakout in either direction indicating the next likely price movement.

Sentiment Analysis: Bullish Bias Persisting

Despite the consolidating market, the sentiment remains predominantly bullish, with 62% bulls versus 39% bears in the recent analysis. This trend is consistent over the past week and days, indicating a leaning towards bullish expectations.

Weekly Pivot Points: Key Levels to Watch

• WR3 - 1.09677
• WR2 - 1.09571
• WR1 - 1.09516
• Weekly Pivot - 1.09465
• WS1 - 1.09410
• WS2 - 1.09359
• WS3 - 1.09253

Long Term Trading Outlook: Reading Between the Lines

1. Bearish Candlestick Patterns: Bearish engulfing and shooting star patterns at the 78% Fibonacci retracement level indicate potential reversal signs.
2. Moving Averages: The price is currently above the 55 and 100-period ADMAs, suggesting these may act as support.
3. Directional Movement Index (DMI): The DMI indicates a weak current trend, hinting at possible market consolidation.

Key Takeaways:

1. Market Awaits Catalyst: The EUR/USD pair's current stability suggests it is poised for movement following significant economic releases or events.
2. Bearish Patterns Emerge: Bearish indicators suggest potential downward movements, but confirmation is needed.
3. Consolidation Phase: The lack of strong directional momentum points towards a period of market consolidation.

Conclusion: Trading Insights for EUR/USD

For bullish traders, the current sentiment suggests potential opportunities, particularly if the pair breaks above the immediate resistance levels. Conversely, bearish traders should watch for signs of a reversal, especially if bearish patterns are confirmed by a break below key support levels.

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