27, June 2016

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

General overview

The UK decision to leave the EU led to a collapse of the world markets. As a result they fell to the record historical levels. Now the European Union is ready to negotiate with London about its exit, but until then, the UK remains a member of the Union. The EU hopes to maintain a partnership with Britain after its exit.

Current situation

The pair showed a negative dynamics right after the referendum results publication. The EUR/USD fell to the historical lows, from 1.1370 to 1.0900 and lost about 500 pp. Now the euro is under pressure and the dollar is gaining popularity. The resistance is at 1.1200, the support lies in at 1.1130.

MACD moved into the negative area. If the indicator remains there that will be a sell signal. RSI is close to the undervalued area. If RSI enters the area that will be a sell signal. In the scenario where the oscillator grows we will get a buy signal.

The Moving Averages (50, 100 and 200) are parallel to each other. However the 50-SMA broke the two others and is moving downwards. If the current situation preserves that will be a sell signal.

Trading recommendations

The trend is clearly bearish for now. We presume that the next bearish target lies at 1.0900. Still as the marker is undervalued we do not exclude a recovery back above 1.1200.