EUR/USD: Technical Analysis for February 26, 2014

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Intraday bias on the EUR/USD remains strongly on the downside after a sharp decline was seen during the U.S session.  Further decline is expected to 1.35610 support zones as price was able to penetrate and close below the 1.36856 support (last week’s low) with a high volume supporting it on both the 1hour and 4hours time frame. There seem to be a potential reversal on the 4hours time-frame with price closing below the 55EMA with the highest volume of the week seen on the 4hours time-frame.


Moreover the 1hour time-frame seems to support the bearish reversal as fresh cross of the 21EMA and 55EMA with a break of the 1.36856 support (last week’s low) with the highest volume of the week supporting it.  It is no surprise that the sharp decline occurred after price failed to break the supply zones around 1.37714 resistance for days which has been holding its ground since last week.


Fundamentally, the dollar enjoyed a welcome shot in the arm from surprisingly strong U.S new home sales figures and surged against the euro.  The Commerce Department reported that the new home sales jumped 9.6% to 468,000 units in January, blowing past market expectations for new home sales to fall 1% to 400,000. New Home sales in December were revised up to 427,000 units from a previously reported 414,000 units.


Trading recommendation

1.Sell at the 5pips at the break of 1.36606 with 30pips stop loss and 54pips take profit


2.Draw a Fibonacci indicator from resistance 1.37553 to support 1.36606. Wait for a decent retracement to the 50.0 or 61.8  Fibonacci level with a price rejection occurring at one of the Fibonacci levels before going short. This will provide a better entry with reasonable stop loss and take profit.

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