EUR/USD: downtrend may turn into a trend 29 January 2021, 11:03

EUR/USD: downtrend may turn into a trend

29 January 2021, 11:03

Scenario
Timeframe	Weekly
Recommendation	SELL STOP
Entry Point	1.2060
Take Profit	1.1930
Stop Loss	1.2110
Key Levels	1.1930, 1.2060, 1.2158, 1.2308

Alternative scenario
Recommendation	BUY STOP
Entry Point	1.2158
Take Profit	1.2308
Stop Loss	1.2100
Key Levels	1.1930, 1.2060, 1.2158, 1.2308

Current trend

The EUR/USD pair corrects downwards, trading around the level of 1.2098.

The European currency continues to decline. The COVID-19 pandemic remains a major factor in all European countries. Since yesterday, Norway has closed its borders, and entry into the country is only possible for a significant reason. Macroeconomic statistics could only keep the instrument from a deeper fall. The German consumer price index for January was 0.8%, which is better than the forecast of 0.4%. Business confidence in Spain was –3.6 instead of –7.6 in the previous period.

The American currency is growing against the background of rather positive macroeconomic statistics. Initial Jobless Claims amounted to 847K, which is lower than the expected 875K, and Q4 GDP remained positive at 4.0%, in line with analysts' expectations.

Support and resistance

On the local chart of the asset, the price has started to develop the local Head and shoulders pattern. Technical indicators keep a sell signal. Fast EMAs on the Alligator indicator are below the signal, and the histogram of the AO oscillator is trading in the negative zone.

Resistance levels: 1.2158, 1.2308.

Support levels: 1.2060, 1.1930.

Trading tips

After decline or consolidation below the local support level of 1.2060, sell positions with the target at 1.1930 are relevant. Stop loss is 1.2110, above the local resistance. Implementation period: 7 days or more.

After reversal and corrective growth or consolidation above the local resistance of 1.2158, buy positions with the target in the area of ​​1.2308 are relevant. Stop loss is 1.2100.