A new week and a new month, could we see new trend for EUR/USD?
January is over, and we are now into February with the markets back into full swing. Since the start of the year EUR/USD has been in a slow and steady bearish trend from the highs of 1.1235 to the lows of our weekly support of 1.1000 as analysed within the community in our first Sniper Sunday of the year.
Last Friday as we consolidated around this weekly level we saw a strong rejection and support from this level as price printed a large bullish engulfing candle on the daily chart shown, showing us that the bulls are stepping in the market and ready to try and take this pair higher.
Being a new month it is important to analyse the monthly chart and the January monthly candle is showing strong rejection from 1.1000 due to Fridays bullish surge. This now opens the possibility for this momentum to continue into this week. What we can expect to see from this pair is a pullback retracement as we have already begun to see today to retest the areas where price has broken out from last week. If we then see price find support the second wave of buyers will enter the market and take this pair back to the counter trend line with momentum to break through. Once broken the upside potential is huge and we can easily see the highs of January eclipsed and a new higher high on the Daily trend created.
This week all eyes on are the USD which showed signs of weakness last week. Price may consolidate around the 1.1000 - 1.1050 area until we have a catalyst / fundamentals to help push this pair in either direction.
Should price be able to break below 1.1000 and the last level of support at 1.0980 this pair will continue to resume the overall bearish trend and see a fast decline towards 1.0900 and lower.