The EUR/USD has been savaged by dovish ECB comments. Interest rates were kept on hold but Draghi’s comments revealed that a rate cut and further easing had been discussed. The EUR/USD drop brings lower support levels into focus and has given fresh life to the major Bear Flag that has been brewing over recent months.
E/U 4hr: my 4hr chart triangle was a useful guide here and the breakout, if followed, gave 200 pips:
E/U 30 min: the drop was swift after the ECB meeting:
E/U daily: there are two intersecting levels of support coming into focus now. A recent whole number level from 1.11 and the Bear Flag support trend line. Any break and hold below this region would support the Bear Flag breakdown. Note how the monthly chart’s 61.8% fib support at 1.12 didn’t offer much support:
E/U weekly: the Bear Flag is back in focus now with price resting just above the bottom trend line of this pattern. A weekly close and hold below this level would support the 3,500 pip Bear Flag pattern. Any move back below the bottom Flag trend line would then bring the previous low near 1.045 into focus.
E/U monthly: this Bear Flag is set within the monthly chart’s triangle breakdown, but, both patterns suggest a move down to the 0.75 region. One would expect some reaction and support near the major 1.00 psychological level but, after that, the 78.6% fib is near 0.99 and might offer some support too.
E/U monthly Cloud: price has battled the major 61.8% fib region near 1.12 over recent months. Any new rejection of this region would be quite bearish:
USDX weekly: the bearish EUR move has boosted the US$. Price is back above the key 95.50 level which will bring the upper Flag trend line and, then, the 100 level back into consideration:
EURX weekly: the Bear Flag here isn’t quite as close as that on the EUR/USD but, it’s developing:
FX Index Alignment: Following this big move overnight the EURX and USDX are now both aligned for LONG US$ and SHORT EUR.
Summary: the EUR/USD has fallen heavily following dovish ECB commentary. Some key technical support levels to keep in focus now include:
- the bottom trend line of the Bear Flag, near 1.11.
NB: I am away from today for the w/e and updates will be brief and few.