EURUSD Candlesticks and Ichimoku Analysis

Although the single currency rebounded briefly above the Ichimoku cloud top (at 1.4184) last week, as euro failed to sustain such a rise and quickly turned back south, suggesting further sideways consolidation would take place below recent high at 1.4339 and it is quite likely to see a test of the Ichimoku cloud bottom (now at 1.3869). However, it is necessary to see a break below 1.3747 support (also below the Tenkan-Sen at 1.3776) to confirm top has been formed at 1.4339, then correction of the rise from 1.2457 would bring further fall to 1.3500 and possibly 1.3398-1.3410 (approx. 50% Fibonacci retracement of 1.2457 to 1.4339 and current level of Kijun-Sen).

On the upside, only a weekly close above the resistance at 1.4202 would signal the rise from 1.2457 has resumed, then retest of 1.4339 resistance would be seen, break would extend towards 1.4474 (50% projection of 1.2885 to 1.4339 measuring from 1.3747). Having said that, we do not expect sharp move beyond 1.4646 (61.8% projection of 1.2885 to 1.4339 measuring from 1.3747) and the currency pair shall hold well below 1.4720 resistance.

Despite moving higher in most part of last week, the single currency rain into heavy selling pressure just above 1.4200 and retreated sharply from there partly due to active selling in euro against Japanese yen on risk aversion. Whilst price is now trading below both Tenkan-Sen and Kijun-Sen, we must see a break below 1.3888 support to signal the rebound from 1.3747 has ended at 1.4202, then a retest of 1.3747 support would follow. However, only a fall below this support would confirm a downside break of the 1.3747-1.4339 range has taken place, then stronger correction of recent upmove to the Ichimoku cloud top (now at 1.3623) would be seen next.

On the upside, whilst recovery to Kijun-Sen (now at 1.4044) cannot be ruled out, renewed selling interest is likely to emerge around 1.4096 (61.8% Fibonacci retracement of 1.4202 to 1.3927) and bring decline to abovementioned downside targets. Only above 1.4143 (78.6% Fibonacci retracement) would bring retest of 1.4202 resistance but it is necessary to see a daily close above this level would turn the picture bullish again for resumption of upmove.