22.05.201405:58 Forex Analysis & Reviews: Technical analysis of EUR/USD for May 22, 2014

Long-term review

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Today traders eye a series of data: French and German flash manufacturing and services PMIs. The flash manufacturing PMI is expected to improve 53.6 from 53.4 and services PMI is expected to improve to 53.5 from 53.1. The German flash manufacturing PMI is expected to diminish to 53.8 from 54 and flash services PMI is expected to diminish to 54.5 from 54.8. The French flash manufacturing PMI is expected to increase to 51.6 from 51.2 and French Services PMI is expected to increase up to 50.95 from 50.4.

Technical view-

The pair has been in a down trend for the last 3 weeks. It broke two crucial supports. Last week and this week, the pair broke the crucial support at 1.367 and well managed to close above this. If a weekly close below, this level (1.367) in the medium term will raise its voice up to 1.3562, 1.3544, 1.3477, 1.34 and 1.32 levels. At the end of the day, a weekly close below 1.367, the pair will drift up to 1.32 levels as an initial target.

In the daily chart, the pair is moving th the downside towards the crucial support at 1.3620-1.36. At the end of the today's trading session, if the pair closes below 1.36, the pair will extend its correction up to 1.356-1.355-1.3530 immediately and later 1.347 levels next week. If it manages to close above the 1.36 level, it will spike towards 1.3734 initially and later 1.38 levels. The daily RSI favors long side. From the RSI, we can understand if the pair gives a dip on an intraday basis, it can bounce back again towards the consolidation high levels.

In the hourly chart, the pair is giving a positive divergence. The hourly oscillators favor pull back with sl 1.36 on a closing basis. In Asia's trading session, the pair is trading at 1.3682 levels. It looks weak below 1.3678 and strong above 1.3688. The pair made a double top at 1.3688 in the H4 chart. The selling bids will continue until it trades below 1.3688.

Highlights

· If the pair trades below 1.3678, it can fall to 1.3660, 1.3635 and 1.36 levels.

· If it trades above 1.3688, it can shoot up to 1.3712, 1.3723, 1.3734, 1.3755, 1.3775 and 1.3783 levels.

· Those who favors buy side, please wait patiently.

· Use "buying the dip" strategy.

· On a weekly basis, the pair must close above 1.3775 to pause the current down trend.

All the levels are given from MT5.

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