EUR/USD Technicals – Bears Claiming First Blood In 2014

Brand new year, brand new trade opportunities await, and the eternal struggle between Bulls and Bears are preparing to start once again as trading volume begin to get back into the markets. Currently, initiative has been given to bears with prices trading lower sharply this morning, potentially confirming the bearish rejection of the 1.3815 and rising trendline resistance with the possibility of a Triple Top chart pattern forming.

Daily Chart

Should prices push below the soft support of around 1.373, we could see strong bearish acceleration towards 1.36 round figure with ultimate bearish target close to 1.31 should the Triple Top pattern takes flight.

On the fundamentals front, there is also a tint of bearishness as EUR/USD failed to rally significantly when Greece announced that further bailout funds will not be needed. If this is indeed true, then the likelihood of a bearish push between March to May 2014 will be diminished compared to previous years, as market will no longer need to worry if Troika will help to finance the Greek Government during the period in order to prevent the country from breaking away from EUR. Hence, we should have seen a strong bullish push on this great news with the largest bearish risk factor for EUR removed, and the failure to do so suggest that underlying sentiment is actually bearish. Even if one choose not to believe what Prime Minister Samaras has said (as he has been relatively upbeat in the past and have proved to be wrong on numerous occasions), this would still be a reflection of caution which would mean that current bullish uptrend since Nov low will be weaker – favoring at least a temporary bearish pullback.

Hourly Chart

In the short-term, prices may find support between 1.373 – 1.376 even though Stochastic readings are pointing lower amidst a bearish cycle, affirming the 1.373 soft support seen on the Daily Chart. Even though 2014 has started, there is a high chance that volume has not returned to normal with traders taking off today and tomorrow just to extend the holiday season a little bit longer. As such, even if long-term trend is bearish, do not simply expect bears to push sharply lower from here as directionality of current market may still be weak.

This also means that there is a risk where short-term momentum may swing higher, and should price stay above 1.376, there is a chance that S/T bullish momentum will allow for a retest of 1.3815 especially if soft resistance of 1.379 is broken. This does not necessarily invalidate long-term bearish bias, but will the very least delay bearish advancement in the next few trading days.

More Links:
USD/CAD – 2013 In Review
AUD/USD – 2013 In Review

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