4 Dec 2014



EUR/USD broke out of it's November range yesterday, but now has found some support at 1.2300.

Unless ECB rate decision comes out with no further plan about their QE programm (inactivity would be perceived hawkish) the old support at 1.2357 should provide resistance for any upside moves.

A break below the 1.2300 level would open up a way for a further decline to 1.2250 and 1.2200 levels and we need to monitor the reaction at these levels closely, as there is a decade old rising trendline coming in play.

A daily close under this trendline and 1.2200 level is needed to establish any longer term short positions, however, a strong bounce from the trendline would indicate the rate may be ready for a retracement.


It looks like rate is stuck in a small symmetrical triangle formation, however, a break in neither direction would be advisable to trade, as the upside break would simply lead the rate to test the medium term trendline and previous highs at 1.5800 but a break below to test the larger descending triangle and November's range support at 1.5600.


The rate  is currently testing  the important psychological resistance at 120.00. With a lack of strong reaction at this level I am inclined to think the rate will continue trading higher. The bull flag breakout target stands at 120.81, however, there are no significant resistance levels coming up until 124.00.

In case of a pullback - the rate should be supported by a rising trendline and the old resistance/new support at 190.00, but only a break below 117.37 would invalidate my medium term bullish outlook for the pair.


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