Expected dramatic decrease in the price of EUR/USD.

In the last two days we have seen a dramatic decrease in the price of EUR/USD.

In order to determine future support and resistance levels for the bearish trend with Fibonacci method we need to wait for the first major support to develop and that is where I will place the 61.8% Fib level. Saying that, it should be noted that although on a daily chart price closed below a multiday trend line, weekly lower trend line still holds.

Using our Fibonacci method on a weekly timeframe I would like to show you how it was possible to forecast this sudden decline in the price. Using the same method as on a daily chart I have placed the zero level on the bottom of the trend and the 61.8% on the next major resistance level(red line) this gave us an estimated resistance level of 1.4821. Although the price exceeded this level it did not manage close above it, this was followed by a drop to 1.43614 which is the 23.6%. From point of view of this analysis, nothing unusual has happened as of now.

The next step is to see if the price will break the 23.6% level and the lower trend line and then continue with bearish trend or we will see another bullish extension.

If you have any questions please do not hesitate to contact me and  remember to subscribe for more forex news.

Tomasz Gdynia

EUR/USD

In the last few days our forecasted levels provided good support and resistance.  Currently after a break out, 1.4797 level provided a good support and as long as this level holds we got a good potential for further rise. The next key resistance level is 1.4981, if the price will manage to break this level the next resistance is 1.5278. If the price will reach this level we will be expecting to see a pull back all the way back to the 1.4981. It is important to note that the stochastic has been overbought for an extended period of time on a daily and weekly time frame.

Knowing these we can play this setup in two ways. We can go long on the sustained break of 1.4981 targeting 1.5278. If the price will move too far on the breakout I would not advise to chase the trade and instead go long on a pull back. The second option is to go short from 1.5728 targeting 1.4981 level.

If you have any comments please do not hesitate to contact me. I will be more than happy to discuss any issues with you. 

S/R Levels:  

• 1.4649
• 1.4797
• 1.4981
• 1.5278

Tomasz Gdynia

Tomasz.Gdynia@yahoo.co.uk

EUR/USD - Bullish Continuation.

On 1H time frame or less our forecasted level of 1.4261 held very well and the price bounced more than 90 pips. In a longer time frame this move proved to be only a noise. Although the day closed below our key level of 1.4261 the price did not manage to sustain below it and was pushed higher the next day.

Since the price managed to close and sustain above 1.4518 we have a strong reason to expect bullish continuation.  The new forecasted resistance levels are as follow: 1.4649, 1.4797, 1.4981 and finally 1.5278. For trading purposes I will be looking to establish a long position on the break of 1.4649 with a stop loss at 1.4510

Tomasz Gdynia

Tomasz.Gdynia@yahoo.co.uk

Further decline of EUR/USD in the coming days.

Our forecasted resistance at 1.4485 have been tested numerous times and although the price closed above it did not manage to sustain beyond this level. The break of lower trend line on the 4 hour chart supports our view of price decline. Daily stochastic was in overbought zone for the last 10 days and it dropped below the 80 level which further suggests a price decline.  As price moved slightly above our previously forecasted level I will adjust Fibonacci retracement levels to account for the changes. Consequently our first target is 1.4261. By projecting Fibonacci retracement tool from 1.4519 and placing 61.8% on the next support which was created in the last few days we also get 1.4261 resistances consequently further reinforcing our view that 1.4261 will be the key level. If this level will be broken and the price will be able to sustain below it, there is a strong possibility for the bearish trend to develop.

As it is my first post I will get a little bit more in to details, the whole concept is relatively simple although it does require practice. In order to determine future resistance I have used a Fibonacci retracement tool. For our purpose of forecasting future resistance levels we will not draw it from low to high or high to low, which is the standard way to use it and instead we will draw Fibonacci retracements from low and place the 61.8% level on the next resistance level. Fibonacci have been drawn from low of 1.3427 and the 61.8 have been placed at the resistance level of 1.3816(blue line). On the break of 23.6% we have adjusted our tool to better reflect current price action and such as we have placed the 23.8% level at 1.4235(red line) which raised 61.8% level by 15 pips.  After these adjustments we see that all the Fibonacci levels are respected by the price action suggesting that the 0% level will also be a major resistance level. The price should retrace back to 23.6% level which is 1.4235. If the price will be able to sustain above this level and then break 0% level there will be potential for further rise.