EUR/USD Sees Sharp Drop, Correction At 1.3230
ICN.com | Aug 21, 2014 06:00AM ET
The pair dropped sharply in the past three days approaching 61.8% correction at 1.3230. In fact, the mentioned level is significant, and despite that further bearishness is expected, we do not want to risk today the inappropriate Risk/Reward Ratios in light of approaching the referred to Fibonacci support.
Hence, the selling positions are good and we will close most of them today around 1.3230 - 1.3220 waiting for new confirmation signals. Breaking 1.3230 and stabilizing below it could extend the downside move further.
The pair dropped after breaking 23.6% correction, and yesterday's bullish attempt failed to change the general negativity in which the pair is trading in. Today, the pair will face a challenge at 1.6555 which is the intraday interval for a possible bullish rebound or extending the sharp downside move.
Generally, we expect a downside move based on the close SMA's that are almost achieving a negative crossover. Breaking 1.6555 confirms the downside move and pushes the pair towards 1.6445 as the first target favored for the downside move.
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By examening the four-hour graph, we notice strong overbought signals showing on Stochastic and RSI after the previous strong bullish waves. But trading above 100% correction around 103.55 forces us to ignore these signals and expect extendign the bullish wave towards 104.80 represented in 88.65 correction of the bearish wave that started from 105.44 and reached the bottom 100.75 at 161.8% correction.
Trading above 102.80 is positive, but intraday today, the upside move requires stability above 103.10.
The AUD/USD has moved bearishly in the Asian session re-experiencing the initial support at 0.9230 as seen on the provided daily chart. The bearishness started yesterday will be affirmed with a break below the aforesaid support, as we are currently witnessing mild rebound from this zone. To conclude, we will be neutral, while a break below 0.9230 will activate bearish scenario. On the other side, coming above 0.9310 again will negate bearish probabilities.
The NZD/USD has breached through 0.8400 regions comfortably taking technical indicators to oversold regions. Despite this negative breakout, but we can notice probabilities of forming a positive divergence that may bring a bounce. This possibility is not affirmed yet; therefore, we will be neutral over intraday basis.
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