E/U and that break of the 1.35.

Wed 23rd July (9 pm)

Much is being made of the E/U breaking down through the 1.35 level. This is certainly bearish and follows on from the break down through a weekly trend line support that had been in play since mid 2012. That is, for a period of almost 2 years. So, where to for the E/U from here?

E/U monthly: the E/U had been tracking within a triangle pattern on the monthly chart and the current July candle looks like it MAY break down through this pattern. This break can really only be confirmed next week though after the close of the monthly candle:

EUmonthly

E/U weekly: price made a weekly candle break down through this triangle pattern at the close of last week. Note that there is a possible bearish H&S pattern setting up on the weekly chart. The ‘neck line’ of this pattern is at the 1.35 level. Traders need to see a weekly candle close below this level to confirm this pattern:

EUweekly

E/U daily: the trend line break from last week is seen more cleanly on the daily chart:

EUdaily

E/U 4hr: price has broken down through the 1.35 level this week but traders need to see if price holds below this level to see out the weekly candle close:

EU4

A weekly candle close below the 1.35 level would be bearish and would support the weekly chart’s bearish ‘H&S’ pattern. The path of any bearish follow through for the E/U will not be smooth though as there are quite a few S/R levels in the way. The weekly Ichimoku Cloud chart reveals that below current price we still have:

  • the weekly 200 EMA.
  • the bottom of the weekly Ichimoku Cloud.
  • the 50% fib level of this latest bull run.
  • the monthly 200 EMA AND
  • the 61.8% fib level of this latest bull run.

EUweeklyCloud

Summary:

  • Watch for a weekly close below the 1.35 level to short the E/U. Preferably, wait to next week to confirm this bearish close on the monthly candle.
  • Conversely, a failure to close below the 1.35 may suggest reversal. 

 

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