Weekly technical analysis of EURUSD
This is to explain how to read the technical charts effectively . We will cover multiple time frame analysis with different chart types like Heikin Ashi, Candle sticks and Renko for this technical analysis session.
We will consider EURUSD and try to go through different steps explained in this previous post.
Let us try to find the trend direction by analyzing monthly, weekly and daily charts of EURUSD.
Monthly chart of EURUSD
We consider Heikin Ashi charts for monthly and weekly charts. This is because, our objective is to find the trend direction other than price action in monthly and weekly charts.
From monthly chart, you can see that EURUSD is still in a long term down trend channel. But for many months now, it is travelling from lower base of price channel to the upper band. If you have noticed, in any trend, the counter trend moves can be a zigzag or horizontal and more lagging than the moves in major trend direction. Here in monthly chart, current moves are against the major trend. So it can take more time to reach the upper band of channel. So more price swings can be expected. Still, we can assume that it is on the way to upper band.
Weekly chart of EURUSD
So this weekly chart of the EURUSD is in an up trend. Precisely it is the up moving leg of Monthly chart we saw above. Here you can see that EURUSD has already had a sharp up move and now going side ways. Now there are three possible routes from current position.
- Break the upper resistance and move towards upper band of weekly channel and monthly channel.
- Go sideways. For this, price needs to reverse from current levels.
- This one is a reversal in weekly to move towards the lower support line as shown in chart. (This can be a part of 2nd point too)
Let’s move on to daily chart.
Daily chart of EURUSD
Now we are moving to candle stick charts. It will help you to analyse the behavior of each candle too.
So in weekly chart we have seen three possibilities. Let us conclude to what is going to happen in this week.
There is a resistance at 1.2092 from previous high. So if the price breaks that resistance, it can go higher. But it is not likely to happen. Remember from monthly and weekly chart, we are kind of consolidation period, where price moves sideways more than sharp up or down move. So if it is not broken,this week we can expect a reversal to 1.1940 range. If it breaks that level too, it can go down to 1.1550 levels.
Let us see what happens in Renko charts.
Renko chart of EURUSD
I do use renko chart mainly to draw trend lines, support and resistance levels.
In renko charts, you can see that the channel top is already hit by the price. So for an up trend, it must break that top trend line. If it respects the parallel channel, which is very common, price will come down to 1.1940 levels.
So how to enter the possible trades?
Everyone must have their own strategies. After analyzing the charts, make sure you do all the math for proper money/risk management. Retailers, confirm the entries by checking 4Hour charts too. Try to find price action behavior of each candles. Especially the deciding ones at the key support/resistance levels.