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EUR/USD dipped below another important support line and is getting used to a new range. Will it settle in a lower range next week? Not so fast. Here’s an updated technical look at EUR/USD.

The reasons for the fall start in Greece and end at Washington or Beijing – the EUR/USD bears are everywhere. But there’s a big bear-fence below…

At first, the Euro made an initial dip below 1.40. EUR/USD fell to 1.3937 before rising back up to 1.4040. This sharp swing was short-lived. This large move seemed at first as a false break – a false break at a major scale.

As the hours passed, 1.40 was breached again. EUR/USD is at 1.3960. Although this is higher than the initial dip, it lasts longer. So, after a first test, the breakout was confirmed.

EUR/USD fell from a range of 1.4450 to 1.4626 two weeks ago to its previous range of 1.42-1.4450 and then last week to 1.40-1.42. Now, towards the end of another week, it falls to below 1.40.

Where’s the next range? Will we see another lower range next week?

The next range is 1.3750 to 1.40. After being broken, 1.40 turns into a resistance line, and 1.3750 is the next major support. And it’s a very major support line. It was the bottom line at mid-June, and was never breached since then.

Before serving as a support line, it served as strong resistance line, being tested three times: twice in March and once in May of 2009. This line is very clear in many charts – many different time frames.

As EUR/USD settles in the new 1.3750-1.40 range, a further drop isn’t likely in the near future. The dollar will need great force (or the Euro great weakness) to cut through this line. The current strength of the dollar and the weakness of the Euro aren’t set for such a move in the near future.

As in the EUR/USD forecast, I remain bearish on this pair, but I draw the line at 1.3750.

Also check out Casey Stubbs‘ frequent updates on this pair, and James Chen’s recent analysis for it.

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