Negative tone shrouds the European market, EU holds below broken support

With credit ratings in Euro zone come under pressure after a downgrade of Portugal's credit rating by Filtch, the EUR/USD had pushed lower and clearly broken an important level of support. The pair now trades and hold below the broken support at 1.3430. With further downward pressure expected, 1.3200 might not just be too far away. The European Union must strike a balance in the debt situation to stem further depreciation of the EUR against USD, focus will now be on the outcome of the EU summit to be held today. lets see if the summit will make or break the EU for now.

Support tested and broken in EUR/USD!

Finally! A new low is now seen in the latest efforts of bears to push the pair lower. The 1.3430 important support is clearly violated for now. I will expect some renewed selling pressure for this pair targeting the 1.3200 region maybe later this month end. Care must also be taken as there will be EU summit this week. Watch out not too chase the low though.

1.3450/30 support seems vulnerable in EU

with price edging closer to the support near the 1.3450/30 area, the pair now trades heavily near the important support. bounces seems very limited to the upside. Support will mostly likely be tested today it seems.

Although pressured towards the downside, 1.3450 still holds

There will be an EU submit this week on 25th March in Brussels. It would be a 2-day meeting with possible loan package for Greece discussion being brought up. Currently the pair still finds support at the prior lows at 1.3450. If we do see positive development later in the week, the prior lows of 1.3450 will be temporary support for now.

Resistance : 1.3800/50
Support : 1.3450/00

Daily chart rising wedge pattern confirmed

Its been a busy week for me, not much time to update my blog so this would be the 1st update of the week. As we can see earlier on there was a rising wedge pattern in the Daily chart. The pattern is now confirmed with the break of the lower support of the wedge pattern. With the pair failing to retest 1.3850, sellers remain at large in the EUR/USD for now. If we do see break below the prior Low at 1.3450/40 then we will see 1.3200/3100 soon. With ongoing rates normalization process, risky assets are now adjusting their value.

Potential bullish reversal pattern in the weekly

After consolidating for weeks the pair finally broke out of the consolidation range and is ready to challenge the 1.3800/50 resistance up ahead. The weekly chart shows sign of a bullish reversal pattern (a morning star pattern). I would expect further upside potential for this pair here at this juncture. Talks of possible Greece bail out in the markets provide optimism overall.

seems that Euro had found a strong footing here

It seems that EURO had found a rather strong footing here at the 1.3450 region. With numerous doji candles in the weekly chart, the downtrend now in EUR/USD is taking a breather. However the major downtrend trendline which can be seen clearly in the daily chart still holds. The pair is now consolidating in a triangle chart pattern and i might expect a breakout in either direction soon. Keep a close watch on new developments in the market which might provide the next catalyst to fuel the move in this pair.

EUR/USD consolidatiing in a triangle

There was a wave of positive sentiment in the market after the release of the NFP data last week. US data might suggest economy recovery is now in place and might spur demand for risky assets. But for this bull move to really register a significant impact, EUR/USD must 1st be able to break the downtrend channel in the daily chart and get back above the 1.3800 area. lets see how will this unfold.

As somewhat expected....the NFP circus !

with NFP data holding well and jobless rate shows optimism, investors are again riding on the wave of bullish momentum; going back into risky assets. Hours after the release, investors had somewhat feel that the economy is slowly recovering and are rushing into GOLD, STOCKS and high yielding currencies, The AUD looks to challenge the resistance at 0.9100 and EUR/USD is holding well above the 1.3550 support level; Gold is well above 1130. Despite the optimism the problems in Greece is still far from over, but investors are just ignoring it for the moment. On the whole, if we see continued improvement in the comin NFPs result, we might expect the continuation of the bull market this year. As for EUR/USD, i still see that the best approach will still be shorting the rallies as the fundamentals of the pair is still unchanged. Important resistance is still at 1.3800/50.

1.3700 continues to put some pressure on the rally in EU

ADP came and when and with the austerity bailout plan for Greece approved, investors still sees EURO's sovereign debt problem is far from over. Yesterday rally was capped at 1.3735 with 4hourly chart close below 1.3700 for a few sessions, price did not even rallied back to retest the high at 1.3735 today before turning lower back towards the 1.3550 region. Just moments ago, Deutsche Bank was downgraded 2 nothes from AA1 to AA3 rating and this had sent EUR/USD lower to retest the 1.3550 region. the pair now trades at 1.3580. On the whole, the pressure is still on for EUR/USD and i expect rallies will be capped.

Expect powercharged moves in EU tonight

With the meeting going on about plans for Greece and also ADP and ISM in the news later tonight (+8 GMT), we might expect some super moves in the pair. EU now trades in between 1.3700 and 1.3600. watch for a break beyond this range later.

Bullish reversal patterns in the daily chart

It will be worthwhile to note that we are starting to see some bullish reversal pattern for EU in the daily chart. This might mean that a correction for the pair might be in place targeting the resistance area at 1.3800/50. However the longer term trend is still down at the moment and i still prefer to sell on rallies until we see a more solid change in trend, keep an eye for the R at 1.3800/50.

Fundamental wise:
There seems to be some optimism for Greece as Greek PM Papandreaou will put in some 4-5 billion euros in deficit cuts ahead of the meeting with German Chancellor Merkel later in the week, so this seems to support the pair and i will expect more short coverings as we proceed into the week.

Key areas to watch for this EU pull-back

Short coverings were seen in this pair for the past 3 weeks or so at the recent swing low of 1.3444. with about 3-4 touches in the 4Hourly chart, the buying presence is fierce at this area. However, it would be interesting to note how would the pair might react at these important resistance levels at 1.3700,1.3800 and 1.3850. As Prime Minister George Papandreou prepares to meet Germany’s Angela Merkel on March 5, we might see EU trading in range bound until then. current range : 1.3850 to 1.3444. and dont 4get we have the all important NFP friday on dat day too. so stay tuned !