FX.co ★ Technical Analysis of EUR/USD for January 23, 2024

Technical Analysis of EUR/USD for January 23, 2024: Identifying Market Opportunities

Key Takeaways:

• The EUR/USD pair shows bearish momentum, with potential for further decline.
• Indicators and candlestick patterns suggest a cautious market, with a focus on pivotal resistance and support levels.
• Strategic market entry points vary for bullish and bearish scenarios, highlighting the importance of trend confirmation and pivot points.

Morning Economic Brief:

Today's financial calendar is light on significant global economic events. Key data releases from New Zealand and Australia, including quarterly CPI and January flash PMI, are anticipated. Expectations point towards a reduction in CPI inflation (from 5.6% y/y to 4.7% y/y). Australian PMI data, being the first for January, precedes similar reports from countries like the US, Eurozone, Germany, and Japan.

Moreover, noteworthy company financial reports will be publicized, including those from Johnson & Johnson, Procter & Gamble, General Electric, 3M company, Netflix, all before the US market session.

Technical Market Outlook:

The EUR/USD pair experienced a break below its short-term trend line support at 1.0928, dropping to a new local low at 1.0845. This movement indicates a bearish trend with the next target for bears at 1.0825. A breach of this level could lead to testing December 2023 lows at 1.0723. On the flip side, resistances are at 1.0910 and 1.0923 (50 DEMA), serving as potential supply zones. A sustained breakout above this area might signal a shift to a bullish outlook.

Key bearish targets in a significant sell-off include 61% Fibonacci extension at 1.0837 and 100% Fibonacci extension at 1.0735. Notably, a Hammer candlestick pattern has emerged, hinting at increasing buyer interest. However, a sustained upward movement above moving averages is crucial for confirming a trend reversal.

Trend and Indicator Analysis:

The overarching trend has been upward, as indicated by ascending trendlines. However, the current position below the 100-period EMA and the 50-period DEMA suggests potential consolidation or trend reversal. Candlestick patterns like the "Hammer" and "Bearish Engulfing" further illustrate the shifting market dynamics.

The RSI stands at 53.64, indicating a relatively neutral market without clear overbought or oversold conditions.

EUR/USD H1 Indicator Analysis:

• Buy signals: 18 out of 22 technical indicators; 15 out of 18 moving averages.
• Sell signals: 1 technical indicator; 3 moving averages.
• Neutral: 3 indicators.

Market Sentiment Scoreboard:

The current sentiment leans bullish (59% vs. 41% bears), consistent with last week's (58% bulls vs. 42% bears) and the past three days' sentiment (57% bulls vs. 43% bears).

Weekly Pivot Points:

These levels are crucial for identifying potential market reversals and support/resistance zones:

• WR3: 1.09393
• WR2: 1.09207
• WR1: 1.09136
• Pivot: 1.09021
• WS1: 1.08950
• WS2: 1.08835
• WS3: 1.08649

Trading Scenarios:

For bulls: A confirmed Hammer pattern, coupled with a price break above resistance trend lines and moving averages, signals a bullish opportunity.

For bears: A break below the Hammer's low suggests rejection of the bullish reversal, with a potential downtrend continuation. Be cautious of reversal signals, especially near oversold RSI areas, and consider profit-taking or tightening stop losses.

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.

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