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Forex pairs in this Article » EUR/USD

Last Wednesday, I was pretty strongly bullish, and I predicted that:

"The key thing to watch for is whether the price is supported by 1.34, which could be a great level to take longs. If we get a close above 1.3415 today that is a strong sign for continued bullish momentum. If not, we might bubble along for a while before continuing the upwards move. Unless there is some significant news though, I cannot see a sharp move downwards now.

We are heading for 1.35 next and quite probably 1.37, and 1.35 would be an excellent place to take profit or tighten stops on any existing longs. Quite probably the price will take a few more days to break through that key level".

Let's recap on what has happened since then with the daily chart:


The day of my analysis, the price did not close above 1.3415, and we have “bubbled along for a while”. There has been no downwards move. However there has certainly been no strong bullishness.

Let's take a look at the weekly chart:


We can see that last week was a bullish reversal candle, but an extremely weak one as the candle closed within the lower half of its range, with a small real body. It really only qualifies as a reversal candle because the real body of last week's candle was so small. Last week also closed below the resistance at 1.3400 and the previous 80 day high level of 1.3415, the break upwards of which did not hold.

This suggests that the upwards trend is intact, but weak, and must break decisively through 1.3415 soon to keep going.

Let's take another look at the daily chart posted above.

After the large bearish inside bar, the price went down to test the trend line and the support at 1.33, but then bounced back with a bullish semi-pin bar the next day, and a bullish day on Friday.

The uptrend is still in place but I am less bullish than I was last Wednesday. The key question is whether we get a daily close first below the support and trend line at around 1.33, or instead above the previous 80 day high at 1.3415. This should determine whether the bullish trend continues upwards to 1.35 and possibly 1.37, or whether we are going back down to 1.32 and points lower than that.

Having said all that, I still remain bullish as the uptrend is in place and support levels have been holding firm at higher and higher levels.

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