Market remains directionless after disappointing housing data
Volatility goes on. Dollar’s weakness today extends after worse than expected housing data and spiked lower. However momentum is apparently not enough to push dollar through near term support yet. Existing home sales dropped 4.1% in Jul to annual rate of $6.33m from $6.6m, much lower than expectation of a drop to $6.5m. Focus will be turned to new homes sales to be released tomorrow. Further evidence of cooling in housing market will continue to reduce that chance for Fed to resume the tightening cycle in worry of the chain effect on the economy.
From technical point of view, the outlook in market remains mixed and directionless. Further choppy trading might still follow inside established range. In particular, we may yet get another disappointing Ifo report from Eurozone tomorrow that could reverse today’s dollar weakness. Beware!
Daily Pivots: (S1) 1.2756; (P) 1.2827; (R1) 1.2871;
EUR/USD rebounded further as expected but failed to break firmly above mentioned 1.2849 resistance yet. At this point, intraday bias will remain mildly on the upside as long as EUR/USD stays above 1.2805 minor support. On the upside, as discussed before, break of 1.2849 minor resistance will indicate the fall from 1.2937 has finished and further rebound should follow to retest this high, or probably 1.2978 key resistance.
On the downside, even though below 1.2805 will suggest the rebound from 1.2784 has completed, a break below 1.2780 support is needed to indicate rise from 1.2695 has completed and put this 1.2695 support in focus again. Otherwise risk of another short term rise remains.
The bigger picture in EUR/USD remains mixed. Question remains on whether rise from 1.2457 represents resumption of medium term up trend from 1.1639 or merely part of a larger scale consolidation. On the upside, it will take a firm break above 1.2978 cluster resistance (61.8% projection of 1.2457 to 1.1908 from 1.2695 at 1.2974) to confirm the whole medium term up trend from 1.1639 has resumed. On the downside, a break below 1.2695 low will shift favor back to the case that whole rise from 1.1639 has already ended with three waves up to 1.2978 already and corrective fall from 1.2978 is just part of a larger consolidation which should extend at least a few more weeks with a retest of 1.2457 low before completion.
Shing-Ip Tsui is the founder and CEO of
www.ActionForex.com. ActionForex is set up with the aim to empower individual forex traders by providing insightful contents. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.