EUR/USD Forex Technical Analysis – Closed on Bearish Side of Long-Term Fibonacci Level at 1.1185

The Euro closed sharply lower last week after crossing to the weak side of a long-term Fibonacci level. Fundamentally, the single-currency was pressured by a combination of factors including a weakening Euro Zone economy, lower German bund yields and generally positive U.S. economic data. A divergence in monetary policy between the U.S. Federal Reserve and the European Central Bank is also pressuring the Euro.

Last week, the EUR/USD settled at 1.1145, down 0.0099 or -0.88%.

There are some analysts who believe that moving averages are the best tool to trade the EUR/USD but this weekly chart, showing actual not smoothed data is pretty good by my standards. Furthermore, I’m not sure one can make an accurate prediction of future prices with an indicator that is as good as the last price. The Gann angles and the retracement zones are better to use because they have “look forward” powers.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. A trade through 1.1112 will signal a resumption of the downtrend with the next major target a main bottom at 1.1109. As you can see from the chart that this is a potential trigger point for an acceleration to the downside with the next target the main bottom at 1.0569 from the week-ending April 14, 2017.

Last week’s low at 1.1112 fell between a pair of main bottoms at 1.1118 and 1.1109.

The main trend will change to up on a trade through 1.1448. This is highly unlikely, but due to the prolonged move down in terms of price and time, there is a possibility of a closing price reversal bottom.

The minor trend is also down on the weekly chart. A trade through 1.1324 will change the minor trend to up. This will shift momentum to the upside.

The long-term range is 1.0339 to 1.2555. Its retracement zone at 1.1447 to 1.1185 is controlling the longer-term direction of the EUR/USD. Last week, the single-currency closed on the weak side of this zone. It is now resistance.

Weekly Technical Forecast

Based on last week’s price action and the close at 1.1145, the direction of the EUR/USD this week is likely to be determined by trader reaction to the main bottom at 1.1109.

Bullish Scenario

A sustained move over 1.1109 will indicate that counter-trend buyers are coming in to stop the price slide. Holding above the previous main bottom at 1.1118 will indicate short-covering. Overcoming the main Fibonacci level at 1.1185 will indicate the buying is getting stronger.

If a move over 1.1185 is able to generate enough upside momentum then look for the rally to possibly extend into the long-term downtrending Gann angle at 1.1295.

Bearish Scenario

A sustained move under 1.1109 will signal that the selling pressure is getting stronger. The weekly chart indicates there is plenty of room to the downside with the next target angle coming in at 1.0944.