EURUSD to experience a temporary sell off
farhan fazal
EURUSD·
Nov 11 2022
Stop Loss -1.03%
Holding time 3d22hr
1.03109
Entry price
1.04170
Stop loss price
The EURUSD driving average is located at 1.0805. Recall past writings. The target on a break of the 5 year average at 1.1400's was 1.0800 but EUR/USD decided to travel an additional 800 pips to 0.9500 bottoms.
In the life of trading and markets, we may never see again a market price so over and undervalued to trade at 50 year averages, especially from normal currencies such as EUR/USD and DXY. Only cross pairs and JPY contains ability to trade to such extraordinary depths yet remains rare.
For the first time since March 22 when EUR/USD broke below 1.0800, EURUSD at 1.0223 normalized to account for a respectable average but only for the short term. Longer term, EUR/USD remains deeply oversold from target averages at 1.1100's, 1.1300's and 1.1600's.
Next targets longer term are found at 1.0592, 1.0798 and 1.0967 upon a break at 1.0805. Not only is EUR/USD oversold but its price remains extrardinarily low. Short term, next targets are located at 1.0375, 1.0417 and 1.0592.
Massive supports from rising averages are located at 1.0044, 1.0004 and many averages at 0.9900's.
Higher EUR/USD faces the challenge of seasonality when EUR/USD begins its 6 month drop from December/ January to May/June while DXY and USD/JPY begins its 6 month rise for the same period December/ January to May /June. EUR/USD trades its lowest lows for the year in January.
The continuation of the recovery looks the most likely scenario in the very near term. Against that, further upside could motivate the pair to challenge the August high at 1.0368 (August 10) ahead of the always relevant 200-day SMA, today at 1.0437.
The Relative Strength Index (RSI) indicator on the four-hour chart recently climbed above 70, pointing to overbought conditions. In case EURUSD were to stage a technical correction 1.0200 (psychological level) aligns as immediate support. As long as the pair manages to stabilize above that level, it could target 1.0270 (static level from August) 1.0300 (psychological level) and 1.0370 (static level from August).