EURUSD – 50 DMA Broken for First Time Since May

EURUSD – 50 DMA Broken for First Time Since May

By Craig Erlam on Apr 29, 2015 10:13:14 GMT

  • Tweet
  • Email
  • Tweet
  • Email

The EURUSD rally has continued today, forcing its way through the 50-day SMA for the first time in almost a year, while the 50-period SMA on the 4-hour chart has crossed above the 200-period SMA. While there is still one major barrier to break down before I’ll declare myself bullish, this is certainly a strong signal of changing momentum, at least for the short to medium term. The pair is likely to face significant resistance between 1.1025 and 1.1055 where trend lines and past resistance levels – one of which being the upper side of the range it has traded within since the start of March – combine to offer a potentially rally ending barrier.

There’s a few things on the 4-hour chart that tells me that – on the first attempt at least – the pair will fail to break through this big resistance level. The first and most obvious is that recently, every time the pair has made a new high, it has been quickly followed by a correction. That is not a sign of strong trending market conditions. Supporting this is the stochastic and MACD. The stochastic has been overbought since last Thursday, which is not unusual in trending markets. That said, the last couple of rally’s in price action have been met with lower highs on the stochastic, creating a bearish divergence.

This is a red flag and suggests a reversal may be approaching. When so near to a big resistance level, I find this hard to ignore. Especially when the MACD histogram is similarly showing divergence with price action. Of course, these are secondary indicators to price action and should therefore just be treated as a warning.

If 1.1050 does prove to be too strong a resistance, the 50-day SMA may provide a logical support at which we may see increased buying pressure. This would act as confirmation of the initial break and would be very bullish. About Craig Erlam

Based in London, England, Craig Erlam joined OANDAin 2015 as a Market Analyst. With more than five years’ experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic research. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.

Recent posts by Craig Erlam

  • Q3 GDP Key Ahead of Fed Meeting and US Election
  • Fed Speeches Headline Quiet Day
  • Draghi Strongly Hints at December QE Decision

MORE LIVE RATES
Economic Calendar ForexNews.com News, Charts, Research & Video

Copyright © ForexNews.com | Privacy Policy

Market commentary and/or opinions presented do not necessarily represent the opinions of ForexNews. You are advised to conduct your own independent research before making a decision. This website is an information site only. Accordingly, ForexNews makes no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. You should obtain individual financial advice based on your own particular circumstances before making an investment decision on the basis of information on this website.

Будьте первым, кто решился написать!

Поделитесь своим мнением:

E-Mail адрес не будет опубликован.


*