July 27, 2009 04:09

Forex Signals – EUR/USD Weekly Outlook

By:

7-27-09

3:56a GMT – Here we are, about to start another week, almost at the end of July. Time really flies doesn’t it? Just a little reminder to everyone to take a little time out now and again to take a walk, spend some time with your family, do something fun just for yourself. Life is too quick for all business! Anyway, on to the signals!

I wanted to pull a weekly chart for us to look at as we enter this new week to get some perspective on the recent price action, which has seen the dollar lose a lot of strength in the past week and then range with Euro. As you can see from the chart below in 2005 the EUR/USD was just beginning its ascent to all time highs around 1.60 that we saw in late 2007 and early 2008. In the end of 2008 we saw an extremely large drop (over 3500 pips) in just 4 short months. This drop occured as extreme risk-aversion entered the market, investors took money out of the carry-trade and other investments and sought the relative safety of the US dollar. Since then it has been a story of risk-aversion as investors battle positive news with general market jitters and the desire for more risk.

Currently the pair is hovering just above the 50% retracement of the major drop in 2008, and also just below the declining trendline of the 9/21/08 and 12/14/08 highs. You can also see that the slow ss is just about to enter overbought on the weekly, while the RSI is slightly overbought at 60.8. It is for these technical reasons that I remain generally bearish, though I think the EUR/USD has a little bit of room to increase until we see a little more overbought levels. The big key is to watch economic news coming out of the US and Eurozone. Positive news will lend itself to more risk and a spike in the Euro.

(click to enlarge)
eu72709bearish

Click here to receive my free forex signals via email
Click here for more info on how to use my free forex signals
Click here to learn how much you can earn with our Forex Income Calculator
Discuss this signal with me and fellow traders at the new Forex Discussion Groups

Leave A Comment
XHTML: feel free to use any of these tags.

LEGAL DISCLAIMER AND RISK WARNING

Foreign currency exchange trading is highly speculative and is suitable only for those who (a) understand and are willing to assume the risks involved, and (b) are financially able to assume significant economic losses. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. Trading on margin can amplify both gains and losses in your account. Before deciding to trade foreign currencies, you should carefully consider your investment objectives, level of experience, and risk appetite. You should be aware of all the risks associated with foreign currency exchange trading and seek advice from an independent financial advisor if you have any doubts.

All contents or information displayed or contained on Piphut.com are based on a number of assumptions which may not be fully disclosed or explained. Hypothetical trading or performance has many inherent limitations, including the benefit of hindsight and the fact hypothetical trading or performance involves no economic risk. Variables such as the ability to adhere to a particular trading program despite trading losses and maintaining adequate liquidity are material considerations that can adversely affect actual trading results. No representation or warranty is being made or given that any account will or is likely to achieve profits or losses similar to those displayed on Piphut.com. There are frequently substantial differences between hypothetical performance and the actual performance subsequently achieved by a trading program. You must exercise independent judgment when making investment or trading decisions. Past performance is not indicative of future results. Please read the User Agreement and Risk Disclosure Statement for more information.