EURUSD heading towards 38.2% retracement level, another challenge for bulls

After the long extensive bullish rally in the EURUSD pair, the bears have finally managed to step in the market. The pair started its first bearish momentum after it hit the critical resistance level at 1.20838.Most of the professional long-term investors went short with the bearish price action confirmation signal and made a decent profit by riding the medium term bullish rally. Currently, the pair is slowly heading towards the 38.2% Fibonacci retracement level drawn from the low of 20th June 2017 to the high of 8th September 2017.Most of the retail traders are expecting a decent bounce from this level and if the bulls manage to hold the critical support level at 1.17237 then we might see another sharp rise in the EURUSD pair.

Daily chart analysis

Figure: EURUSD pair testing the 38.2% Fibonacci retracement level in the daily chart

From the above figure, you can clearly see that the bulls are waiting on the sideline and any bullish price action confirmation signal will be a good signal to execute long orders. The first bullish target for this pair would be the nearest critical resistance level at 1.19560 and from that level, the sellers will try to enter the market. A daily closing of the price above the critical resistance level at 1.19560 will ultimately challenge the high of 8th September 2017.This level is going to play a very major role in the next movement of the EURUSD pair since a clear break of that level will confirm the initial bottom formation at 1.105803.On the contrary, a failed attempt to break the high of 1.20838 will again lead this pair towards the daily bullish trend line support.

AUDUSD weekly chart analysis

Figure: Plenty of support level on the weekly chart

In the weekly chart, we have a strong bullish scenario. The medium-term weekly bullish trend is still intact and currently, the price is forming a consolidating structure. In the above figure, you can clearly see that the bears have managed to push the price of EURUSD for three consecutive weeks and most of the leading investors are expecting further downside movement in the upcoming days. But considering the longer term scenario, it is better not enter short in this pair. In the weekly time frame, we have strong support at 1.16197.A bullish price action confirmation signal at that current price level will be great opportunity to execute the long order.

In the last week, the FED has already hiked their interest rate on the basis of 25 points but the contradictory statement between FED chairperson Janet Yellen and U.S president has washed away all the gains in the U.S dollar index. Most importantly the pending U.S rate hike decision has also created an extreme level of uncertainty regarding the U.S dollar future strength. To be precise fundamentally the EURO is well ahead of the mighty green bucks which creates a strong hope into the mind of optimistic EURO bulls. So it’s better to look for bullish price action confirmation signal to place long with a tight stop.