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Euro futures have extended their decline since our September 30 analysis. We noted that bulls needed to hold the 1.14 level or we could see selling pressure accelerate. The buyers were not able to hold the level, and the price is now turning even more bearish than it was before.
The Euro might be oversold, though, at this point, so a possible bounce in the short term is not out of the picture. In the chart below, I have shown that we are also in a downtrend channel, and price is currently testing that lower point, so unless we get a sudden surge in selling, probabilities would lean to a short-term recovery, a dead cat bounce before continuing lower.
| Level | Importance |
|---|---|
| 1.1400–1.1435 | Broken summer support and the falling daily EMA |
| 1.1350 | Previous downside reference; potential resistance on a recovery |
| 1.1300–1.1325 | Recent hourly rebound area and an important recovery test |
| 1.1275 | Immediate resistance near today’s daily high |
| 1.1215–1.1230 | Recent hourly low area |
| 1.1190–1.1200 | Deeper daily wick low and the 1.1200 psychological level |
| 1.1100 | Broader downside reference from the previous analysis |
Things To Watch
- A stronger recovery. Clearing 1.1275 would improve the short term bullish picture, but holding above 1.1300–1.1325 would be more meaningful.
- Another failed bounce. A recovery into 1.1275 or 1.1300–1.1325 that stalls and forms an hourly lower high would keep sellers in control. The recent lows would then become the next test.
Possible Trades
Bull: Long trades could be looked at here, with stops below 1.190, targets set at 1.14.
Bear: The market is oversold now, and probabilities do not lean toward a strong short trade.
This analysis is for educational and informational purposes only and does not constitute trading advice or a recommendation to buy or sell any futures contracts. Futures trading involves significant risk and may not be suitable for all investors. Always conduct your own research and consult with a licensed financial professional before making trading decisions.
