FX.co ★ Technical Analysis of EUR/USD for January 30, 2024

EUR/USD Developing Falling Wedge Pattern

Key Takeaways:

1. EUR/USD Trend Analysis: The pair shows a persistent downtrend, reaching new lows. Watch for potential shifts marked by key resistance levels at 1.0846 to 1.0830.
2. Technical Indicators: A mix of bullish and bearish signals with predominance of bearish sentiment. Key focus on RSI and moving averages for trend confirmation.
3. Market Sentiment: Current sentiment leans towards bullish, but recent neutrality suggests uncertainty. Upcoming economic reports and market reactions are crucial for directional clarity.

Morning Brief:

European markets are signaling a positive opening, contrasting with the mild downtrends in the Asia-Pacific region. Notably, the Hang Seng Index has declined by 2.02%, offsetting recent gains. Meanwhile, marginal uptrends are observed in Korean and Japanese markets.

Significantly, the US Treasury's forecast of a reduced net market debt of USD 760 billion for January-March 2024, a USD 55 billion decrease from previous estimates, influenced the markets. This led to a decrease in yields of US 10-year bonds.

Key Economic Updates:

09:00 - Spain, CPI inflation and GDP report.

10:00 - Germany and Italy, GDP report

11:00 - Euro zone, GDP report

11:30 - SNB Jordan's speech

16:00 - USA, JOLTS labor market data and CB index

16:30 - ECB Nagel speech

22:40 - USA, API survey report on changes in crude oil stocks

Quarterly reports of US companies:

UPS (UPS) - before the opening of the session on Wall Street

Pfizer (PFE) - before the opening of the session on Wall Street

Microsoft (MSFT) - after the close of the session on Wall Street

Alphabet (GOOG) - after the close of the session on Wall Street

AMD (AMD - after the close of the session on Wall Street

Starbucks (SBUX) - after the close of the session on Wall Street

Technical Market Outlook:

The EUR/USD pair has reached a new low at 1.0797, continuing its downward trend. Bears aim for the December 2023 low of 1.0743. Two critical developments to note are a potential Bullish Ending Diagonal Pattern and multiple Bullish Divergences between price and momentum. The 1.0846 to 1.0830 zone is a key resistance area, and only a sustained breakout above this could shift the short-term outlook to bullish.

Technical Insights:

Trend: The current downtrend is marked by lower highs and lows, with a descending channel suggesting continued bearish sentiment.

Candlestick Patterns: Two hammers indicate possible bullish reversal, but require confirmation. A bearish engulfing pattern suggests the downtrend may persist.

Moving Averages: The price is below the 100-period EMA and 50-period DEMA, indicating bearish market sentiment.

Relative Strength Index (RSI): The RSI near 40 suggests potential for further downward movement before reaching oversold conditions.

EUR/USD H1 Intraday Indicator Analysis:

• Sell signals: 14 out of 22 technical indicators
• Buy signals: 1 indicator
• Neutral: 7 indicators
• Moving averages: 15 indicating Sell, 3 indicating Buy

Sentiment Scoreboard: Overall sentiment is bullish (58% vs. 42% bears). The past week was similarly bullish, while the last three days show neutral sentiment (50% bulls vs. 50% bears).

Weekly Pivot Points:

• Upper Resistance Levels: WR3 - 1.08727, WR2 - 1.08558, WR1 - 1.08450
• Pivot Point: 1.08389
• Lower Support Levels: WS1 - 1.08281, WS2 - 1.08220, WS3 - 1.08051

Trading Insights:

Bullish Scenario:

• Reversal from Hammer: Confirmation of hammer candlesticks with bullish price action could suggest a rally.
• Break Above Resistance: A significant break above the descending channel and moving averages could indicate a trend reversal.
• RSI Trend Shift: An RSI cross above 50 could signify increasing bullish momentum.

Bearish Scenario:

• Confirmation of Bearish Engulfing: Further downward movement post-bearish engulfing pattern would reinforce bearish sentiment.
• Rejection from Moving Averages: Price rejection at moving averages could indicate continuation of the downtrend.
• RSI Downtrend: A declining RSI without bullish price movement suggests ongoing selling pressure.

Conclusion:

The EUR/USD market presents a cautious stance, with potential for either a reversal or continuation of the current downtrend. Confirmation hinges on upcoming price action and economic events.

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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