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Forex pairs in this Article » EUR/USD

Last's Wednesday's analysis ended with the following significant predictions:

1. What was previously strong support between 1.3440 and 1.3465 seems to have turned into strong resistance.
2. A sustained upwards break of 1.3475 will be a bullish sign, but even afterwards, the price is quite likely to consolidate around 1.3500, if there is no significant news.
3. No firm overall bias.

Let's take a look at the hourly chart to see how things actually turned out since then:

EURUSD H1 111813

We were wrong about the zone of 1.3440 to 1.3465 turning into strong resistance. We were broadly right about the price consolidating around 1.3500 and having no strong bias. The most interesting thing is the lack of sustained downward movement after the ECB's surprise 0.25% rate cut, which suggests an underlying bullishness.

Turning to the future, let's take a look at the weekly chart below:

EURUSD Weekly 111813

Last week produced a bullish inside candle that closed close to its high. The action has reversed from the 50% Fibonacci retracement level of the recent upwards move, and at the end of last week broke above the weak resistance from 1.3440 to 1.3465. These are all bullish signs.

We can see more detail from the daily chart below:

EURUSD Daily 111813

The price made a higher low every day last week, and ended the week with a bullish reversal bar that made the high of the week and also closed near its high in the top quarter of its range. These are bullish signs. However looking at the candles it can be seen that the move up is not as strong and impulsive as the recent move down, which should give bulls cause for concern.

Based on our technical analysis, the following predictions can be made:

1. Weak bearish bias, but ongoing consolidation and ranging is very possible in the absence of significant news.
2. A break with momentum upwards through last week's high of 1.3505 will be a mildly bullish sign and should then see the price reach 1.3550 or very close to it.
3. A break with momentum upwards through 1.3575 will be a bullish sign, but there is bound to be some kind of sharp pull back happen not far beyond this level.
4. If the price cannot break 1.3505 today, it will probably fall and find support at one of the recent daily lows; 1.3418 is a likely candidate. These daily support levels are not marked on the chart with horizontal lines.
5. No touch trades are recommended.
6. A long trade is recommended from any bullish reversal bar on the hourly chart at or just above the 1.3418 level.

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