FX.co ★ Technical Analysis of EUR/USD for February 1, 2024

EUR/USD Market Movements Post-Fed Decision

Key Takeaways:

1. Fed's Cautious Stance: The FOMC's decision to maintain rates at 5.25-5.50% highlights a cautious approach, waiting for more definitive signs of inflation decline. Future rate cuts hinge on upcoming labor market data.
2. Technical Indicators Lean Bearish: The EUR/USD pair is showing bearish signals, with a Shooting Star and Bearish Engulfing patterns, and trading below key moving averages. The RSI nearing oversold territory adds complexity to the trend analysis.
3. Potential for Reversal: Despite bearish trends, the presence of a Hammer candlestick at the support level suggests a possible bullish reversal. This mixed outlook requires careful market monitoring for trading insights.

Technical Insights:

Candlestick Patterns: A Shooting Star pattern, often seen as a bearish reversal sign, hints at selling pressure after an uptrend. The Bearish Engulfing pattern further suggests bears gaining dominance, potentially leading to further price declines.

Moving Averages: The pair is trading below both the 100-period EMA and the 50-period DEMA, indicating a bearish trend. Downward sloping moving averages reinforce this sentiment.

Relative Strength Index (RSI): RSI near 34.86 is close to the oversold territory, signaling a potential market reversal if it drops below 30.

EUR/USD H1 Intraday Indicator Analysis:

• All 22 technical indicators signal a Sell
• All 18 moving averages also suggest a Sell

Sentiment Scoreboard: Current sentiment is bullish (58% bulls vs. 42% bears), with last week's sentiment also leaning bullish (55% bulls vs. 45% bears). The past three days, however, show a neutral sentiment (50% bulls vs. 50% bears).

Weekly Pivot Points:

• WR3: 1.08727
• WR2: 1.08558
• WR1: 1.08450
• Weekly Pivot: 1.08389
• WS1: 1.08281
• WS2: 1.08220
• WS3: 1.08051

Bullish Scenario: A bullish turn might occur if the Hammer candlestick pattern at the support level is respected, indicating a potential reversal. A break above the moving averages could signal a trend change, further confirmed by an increase in buying volume and an upward RSI movement.

Bearish Scenario: Continued bearish momentum is likely if the support level breaks. A confirmed bearish scenario involves further decline, coupled with a downtrend in RSI and high selling volume. The moving averages acting as resistance would further affirm this.

Conclusion:

The EUR/USD chart presents a complex picture. Bearish patterns and trends hint at continued downward movement, yet the Hammer candlestick at the support level leaves room for a bullish reversal. Investors should carefully monitor these conflicting signals to navigate the market effectively.

Useful Links

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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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