Euro turns bullish on Fibonacci retracement

DailyFX forex winners and losers

The euro is the strongest performing currency against the US dollar at the close of European trade with an advance of 0.47% on the session. On Friday, the EUR/USD rebounded off daily support at the 50% Fibonacci extension taken from the May and June highs at 1.2250 with a rebound in the RSI off former trendline resistance now serving as support, offering further conviction on our near-term bullish bias. The single currency is not pressing resistance at the 61.8% Fibonacci extension taken from the July and August lows at 1.2350 with a breach above this mark eyeing subsequent topside targets at the monthly highs at 1.2440 and the 100% extension at 1.2480. As we noted last week, the euro remain constructive as it continues to trade within an ascending channel formation dating back to the July lows with only a move below 1.2250 invalidating our interim bias while a break below the monthly lows at 1.2132 would put us back on the short side.

The 30 min scalp charts shows the euro breaking above a short-term descending channel formation before losing stream just above the 38.2% Fibonacci extension taken from the August 2nd and 10th lows at 1.2360. The rejection above this mark suggests further advances in intra-day trade may remain limited with interim support targets seen at 1.2335, the 23.6% extension at 1.2313, and 1.2280. Only a break below the last week’s low at 1.2240 would invalidate this setup. A break of the highs eyes subsequent topside resistance targets at 1.2395 and the 61.8% extension at 1.3430. Note that a breach above the monthly high at 1.2440 offers further conviction on intra-day long scalps with such a scenario eyeing our objective at 1.2480 (the 100% extension noted on the daily chart).

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

1.2932

100-Day SMA

1.2684

50-Day SMA

1.2396

2012 EUR High

1.3485

The Australian dollar is the weakest performer against the greenback with a decline of 0.62% on the session. As highlighted in last week’s Scalp Report, the AUDUSD remains poised for correction lower with the exchange rate continuing to respect Critical resistance at the 78.6% Fibonacci retracement taken from the late-February decline at 1.0585. This level remains paramount for the aussie (on a close basis) with a breach above the monthly high at 1.0615 invalidating our near-term bearish bias. Interim daily support rests at last week’s low at 1.0498 backed by 1.0450 and the 61.8% retracement at 1.0370. Note that daily RSI now looks poised for a trigger break below trendline support dating back to the June lows with such a scenario offering further conviction on our directional bias.

The 30min scalp chart shows the AUDUSD breaking below the 23.6% Fibonacci extension taken from the July 24th and August 1st lows at 1.0520 early in the session, with interim support targets seen at 1.0495, 1.0465 and the monthly low at 1.0435. With RSI now below the 30-threshold, look for pullbacks in the exchange rate to initiate new shorts with interim resistance levels seen at 1.0520, 1.0540, and the 38.2% extension at 1.0575.

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

1.0289

100-Day SMA

1.0199

50-Day SMA

1.0242

2012 AUD LOW

9582

About the Author
Michael Boutros

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
WEB: www.DailyFX.com

Comments
comments powered by Disqus