EUR/USD Technical Analysis – May 14, 2024

EURUSD Technical Analysis May 14 2024 - Quantum Strikes
EURUSD Technical Analysis May 14 2024 - Quantum Strikes

In today’s technical analysis of the EUR/USD pair, we’ll delve into key levels and market behavior to provide insights and potential trading opportunities.

Pivot Points and Key Levels

  • Daily Pivot Point: 1.07874
  • Upside Levels:
    • Last Week High: 1.07905
    • Yesterday and Weekly High: 1.08067
    • R1: 1.08091
    • Monthly High: 1.08126
    • R2: 1.08283
    • R3: 1.085
  • Downside Levels:
    • S1: 1.07682
    • Yesterday and This Week Low: 1.07658
    • S2: 1.07465
    • S3: 1.07273
    • Last Week Low: 1.07239
    • This Month Low: 1.06495

Market Behavior

The EUR/USD pair has continued to push higher, reaching an entry area after breaking through its previous daily high. However, significant resistance has been encountered, leading to a pullback. This resistance zone is crucial; if the market retests this level and breaks through, it is likely to bounce back strongly.

On the 4-hour (4H) timeframe, there is a notable bearish divergence, which could potentially repeat itself on the 1-hour (1H) timeframe if the price continues to move upward. This divergence suggests that the bullish momentum might be weakening, and a correction could be imminent.

Technical Indicators and Patterns

  • Resistance and Support Analysis:
    • The market faced resistance near the weekly high of 1.08067, just shy of the R1 level at 1.08091.
    • On the downside, support is expected around S1 at 1.07682 and further down at the significant level of 1.07658, which is both yesterday’s and this week’s low.
  • Divergence and Price Action:
    • The bearish divergence on the 4H chart indicates that despite higher highs in price, the momentum is not confirmed by the RSI, suggesting a potential reversal.
    • If the price ascends towards the resistance levels again, traders should watch for similar divergence patterns on the 1H chart.

Trading Strategy

Given the current technical setup, a prudent approach would be to anticipate a pullback from the resistance levels and the channel border. The bearish divergence supports this view, indicating a possible reversal.

Trade Setup:

  • Entry: Consider short positions if the price action confirms a rejection at the resistance levels near 1.08067 to 1.08126.
  • Target: Aim for the support level around 1.07600, which aligns with the S1 pivot and the psychological level just below the daily pivot.
  • Stop-Loss: Place a stop-loss above the monthly high of 1.08126 to manage risk effectively.

Conclusion

Today’s technical analysis of the EUR/USD pair suggests caution for bulls as the pair faces significant resistance and bearish divergence on higher timeframes. A potential pullback towards the support level around 1.07600 seems likely, providing an opportunity for short-term traders to capitalize on the market correction.

Trading our dreams into reality,
Mihai Paul Olteanu