The EURUSD pair has been trading higher for the sixth consecutive months. The EURO bulls gain solid buying pressure from the very beginning of the year 2017 as the market digest the data of the Mr. Trump statement regarding the increment of fiscal spending and tax cut policy program. Though the FED has projected three rate hike for the year 2017, the EURO bulls pulled triggered after hitting the critical support levels at 1.03301.Most of the professional investors in the global trading community went long with bullish price action confirmation signal and made a decent profit by riding the bullish rally.
Though the bulls are in full control of the market, most of the leading technical analyst is expecting a strong bearish correction in the EURUSD pair. Currently, the pair trading just below the 200 weekly SMA and traders are expecting a bullish cap near the critical resistance level at 1.1800 markets. Most of the leading investors are cautiously waiting in the sideline to execute their short orders near that critical resistance level with bearish price action confirmation signal.
Let's see the technical analysis of the weekly chart
Figure: Strong resistance level at 1.1800 markets aligned with 38.2 % Fibonacci retracement level
From the above figure, you can clearly see that the price is sharply approaching towards the 38.2 % Fibonacci retracement level drawn from the high of 4th May 2014 high to the low of 15th March 2015.The 38.2% resistance level has also been reinforced by the 200 weekly SMA and most of the leading analyst are expecting a sharp drop in the EURUSD pair from that zone. The extensive bullish rally in the daily chart of the EURUSD pair is nothing but the result of the ongoing weak performance of the U.S dollar. But the financial analyst is expecting another rate hike from the FED prior to the closing of the year as the Job sectors performance is relatively stable.
If the bearish manages to push the price down from the critical resistance level at 1.1800 marks then first bearish target for the EURUSD pair would be the critical support level at 1.10802.This long down fall of the EURO against the mighty green bucks might even exceed 700 points in the global market. However, the pair might find some strong bullish support near the 1.10802 mark since the 100 day SMA aligns with the 50 % Fibonacci retracement level drawn on the daily chart.
Let’s see the daily chart retracement levels
Figure: Possible bullish retracement levels on the daily chart
From the above figure, you can clearly see that 100 days SMA is supported by the 50 % retracement level. So if the bears manage to push the price lower from this current level then an imminent drop of this pair towards the 50 % retracement level is highly probable.
As layers of resistance lie near the 1.1800 market, the leading currency analyst is considering buying the EURUSD pair as premature act. The month of July is almost over and we might see a last bullish surge in the EURUSD pair in the beginning of the next month. However, the bulls are most likely to run out of steam as the market will find lots of sellers near the 1.1800 mark.