FX.co ★ Technical Analysis of EUR/USD for February 7, 2024

EUR/USD Continues The Bounce

Key Takeaways:

• Germany's industrial production struggles, albeit with signs of recovery.
• Technical indicators reveal mixed signals, hinting at potential volatility.
• Sentiment leans bullish, though caution is warranted given the uncertain outlook.

Morning Brief:Germany's industrial production saw a year-on-year drop of 3.0%, outpacing expectations of a 2.4% decline and showing a slight improvement from November's 4.3% fall. However, a month-on-month decrease of 1.6% versus an anticipated 0.4% suggests ongoing challenges. Despite this, yesterday's unexpected rise in German Factory Orders, driven by large-scale purchases, hints at potential sectoral recovery, though broad-based improvements remain absent.

Technical Market Outlook:EUR/USD experienced a notable rebound from its weekly low of 1.0724, testing this threshold twice before advancing. Yet, resistance at 1.0768 and 1.0781 caps potential gains, placing bulls at a critical juncture. With momentum weak and the outlook bearish, support at 1.0755 becomes crucial for near-term stability.

H4 Time Frame Technical Insights:The presence of bearish engulfing patterns and a shooting star candlestick signals potential reversals, while two hammers suggest a possible bullish turnaround. The pair's position below both the 50-DEMA and 100-EMA reinforces bearish sentiment, despite a balanced RSI of 47.01.

EUR/USD H1 Intraday Indicator Analysis:Current indicators show a mixed signal with a predominance of buy signals (16 out of 22), contrasting with moving averages that lean towards sell signals (10 out of 18). This divergence underscores the market's uncertainty.

Sentiment Scoreboard:The sentiment is cautiously optimistic, with a majority bullish outlook (56%) against 44% bearish sentiment, maintaining a stable trend from the previous week.

Weekly Pivot Points:Key levels to watch include WR3 at 1.08147 and WS3 at 1.07391, with the weekly pivot at 1.07769 serving as a barometer for short-term direction.

Trading Insights for EUR/USD

For bulls, a sustained move above the 50-DEMA and 100-EMA, validated by rising RSI, could mark the beginning of a bullish trend, targeting higher resistance levels.

Conversely, bears should watch for price rejection at key EMAs and a breakdown below recent hammers, potentially extending the downtrend towards lower support zones.

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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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