EUR/USD had a strong upward momentum last week and made a substantial 1.3 % climb hitting a 14 month high. Despite the fact that the movement was a textbook break – out from the consolidation area between 1.325 and 1.34, the sharp rise took the majority of the human traders by surprise. The rise trapped many traders.
From a technical perspective the question is if this pair would show some exhaustion patterns? For this reason the first trading day of the week will be of paramount importance. After such a sharp rise the daily candle of 04.02.2013 will be very important.
The recent market fluctuations were closely related with the fundamental releases. In the weak ahead many fundamentally important events are scheduled to take place, that would lead potentially to a lot of volatility.
Trading outlook:
The trading outlook is difficult this week, the pair is in an uptrend having incredibly strong momentum and fundamentals. This situation is difficult for the majority of human players who are actually trapped in their short positions.
As the pair is strong not only from technical but also from fundamental perspective the best solution would be to exit at the first correction, in that respect a reversal doji after Monday would be great news.
As for the entry in the direction of the trend, I would say that this is difficult if you want to have close stops.
A break – out above the last week close at 1.37 would be a good break - out entry, and potentially a trade for at least 50 pips up to 1.375.
Main Weekly Resistence : 1.38
Main Weekly Support :1.34, 1.35
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