By Mohammed Isah of fxtechstrategy.com
: The pair remains firmly biased to the downside in the short and medium terms and continues to target lower prices following its rejection of the 1.3838 level last week.
To view a chart of the pair,
As we have written previously, we expect the euro to trend lower against the greenback as long as the euro holds below its Feb. 9 high/Feb. 1 low at 1.3838/1.3851 and the Jan. 21 low/Feb. 3 high at 1.4025/1.4028.
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Although the pair printed a hammer candle Friday, which is a bottom reversal signal, and closed almost flat for the week, it retains its broader weakness activated from the 2009 high at 1.5143.
If the pair moves below the 1.3584/1.3530 levels, it will resume its medium-term downtrend toward 1.3422/1.3409 levels, its .61 Fibonacci retracement/May 18 low. Below there, the next target would be the June 3 low at 1.3211.
Higher-level chart studies are bearish and pointing lower, supporting this view. However, the immediate risk to our analysis will be Friday's hammer print, which could trigger a corrective recovery that could target the Feb. 10 level at 1.3675.
A cut through there would expose the Feb. 9 high/Feb. 1 low at 1.3838/1.3851. We expect a reversal of roles at this key resistance area that would cap further upside gains and turn the pair back down again. This would be consistent with the broader medium-term bearishness.
However, if the pair breaks above the latter level, it could target 1.4025/1.4028, its Jan. 21 low/Feb. 3 high.
On the whole, the euro/dollar pair continues to retain its medium-term bearish structure and looks set to weaken further, below the 1.3584/1.3530 levels.
Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces
for his subscribers. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.