Technical Market Overview:
The EUR/USD bounce has been capped at the level of 1.1040, so the next trading range is being established as the liquidity dries up in the last days of January. The market conditions are extremely oversold on this timeframe, but due to the weak and negative momentum that is still hovering below its fifty level, the odds for another leg down are still high. The next target for bulls, if the breakout is genuine, is seen again at the level of 1.1040 and 1.1065, but the real gamechanger is seen at the level of 1.1076. Please notice that the downside is limited by the lower channel line as well, so the support might help the price to move higher, but the market moves should be limited ahead of a high-risk event today - Brexit.
Weekly Pivot Points:
WR3 - 1.1171
WR2 - 1.1139
WR1 - 1.1072
Weekly Pivot - 1.1044
WS1 - 1.0977
WS2 - 1.0946
WS3 - 1.0872
Trading Recommendations:
Not much has changed since the last week in a bigger perspective. Still, the best strategy for current market conditions is to trade with the larger timeframe trend, which is down. All upward moves will be treated as local corrections in the downtrend. The downtrend is valid as long as it is terminated or the level of 1.1445 clearly violated. There is an Ending Diagonal price pattern visible on the larget timeframes that indicate a possible downtrend termination soon. The key short-term levels are technical support at the level of 1.0981 and the technical resistance at the level of 1.1267.
