Article originally published on innerfx.com and republished here with permission
Quote of the day: “It is nobler to declare oneself wrong than to insist on being right – especially when one is right.” ~ Friedrich Nietzsche
Good morning. The euro found temporary support at $1.35 after last week’s large decline on speculation Greece is nearing default. From a technical perspective, a recovery is likely and the first upside target would be 1.3830/50. Anyway, I don’t think it’s a good idea to buy it – but rather wait for such higher levels to be reached before selling the pair or sell on weakness if 1.3700 remains intact and downtrend resumes at full speed.
Let’s take a look at some charts, starting with EURUSD
As seen in the chart above, yesterday’s candle confirms support at 1.3500. Although eurozone fears are here to stay and the pressure on the EUR is very high, a correction shouldn’t come as a surprise because there’s a lot of room to the upside after such a fast decline.
Current consolidation is clearer on the 4-hrs chart and it’s worth to keep an eye on this resistance zone at 1.3700. Buying on the break of said resistance is an option to consider if you really know what you’re doing – being ready to switch side on the very first sign of downtrend continuation. Personally I wouldn’t try to catch the knife.
Resistance is being tested against the Australian Dollar as well, after support around 1.2900 held. The main setup to consider here is a potential breakout above 1.3230/50 – but careful.
It seems that parity level is a tough barrier for the US dollar and yesterday’s signal suggests more downside from here.
I’m no longer on the bulls side as the Aussie failed to hold above 1.05-1.06 and followed the stock markets lower. Even though I’d prefer to buy it, I don’t see any reason to do so. Not now.