Short Term Technical Analysis for Majors (07:00 GMT)
The Euro continues to trend lower, ahead of EU summit, as negative sentiment, fuelled by comments of German Chancellor Merkel, Spanish auctions and Germany’s credit rating cut keep the price under pressure. As the pair touched strong support at 1.2440 yesterday, immediate focus turns towards 1.2400 and possible extension to annual low at 1.2287 in a short-term. Overnight’s brief consolidation was limited at 1.2500, by 55 day EMA, with negative near-term studies seeing not much prospect for further corrective action for now, with significant barriers above 1.2500, standing at 1.2530 and 1.2580.
The near-term outlook still sees the downside risk, as bounce off 1.5538, 25 June low, struggles at 1.5650 zone, with near-term price action in sideways mode. However, the near-term rally remains protected by rising trendline off 1.5538 at 1.5600 zone, where also 55 day EMA lies. Loss of this level would weaken the structure and re-focus the downside. Clearance of 1.5650 to open 1.5685/1.5700 next.
Larger picture’s upside rejection at 1.5776, where 200 day MA capped the rally, however, will keep the short-term structure under pressure, as long as the latter caps the upside.
Reversal off 80.60 barrier that so far fell to 79.22, keeps the near-term price action under pressure, after loss of very strong supports at 80.00 and 79.80. Corrective/consolidative move off 79.36, remains limited under initial resistance at 79.80, with bearish short-term technicals, seeing risk of further decline and test of 79.00, figure support and 78.83, 200 day MA. Any stronger corrective action needs to clear minimum 80.00, to provide relief.
Moves sideways around 0.9600 handle, after rally from 0.9420 base briefly tested 0.9650 barrier yesterday. Near-term picture keeps positive tone and sees potential for further retracement of 0.9769/0.9420 descend, however, hourly MACD bearish divergence, increases risk of fresh weakness. Consolidation range floor at 0.9580, holds the downside for now, with break lower to expose strong support at 0.9540 zone, loss of which will be bearish. At the upside, lift above 0.9650 opens 0.9675 and 0.9700.
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