Yesterday the pair fell slightly but managed to renew its local highs amid traders taking profit on long US Dollar positions prior to New Year.
This week low volatility is expected. Attention needs to be paid to the ECB Monetary Policy Meeting Accounts, due on Thursday. However, considering the publication comes out on New Year’s Eve it is unlikely to increase activity on the market.
Support and resistance
Bollinger Bands on the daily chart is moving horizontally while the price range is slowly widening from the top. MACD is growing and giving a weak buy signal. Stochastic is in the overbought zone and trying to turn down.
The indicators recommend waiting for clearer trading signals.
Support levels: 0.7234, 0.7200 (22 December low), 0.7183, 0.7158, 0.7128, 0.7100 (17 December lows), 0.7068.
Resistance levels: 0.7259 (local high), 0.7282 (yesterday high), 0.7300, 0.7334 (10 December high), 0.7363, 0.7384 (4 December high), 0.7400.
Long positions can be opened after the breakout of the level of 0.7280 (with the appropriate indicators signals) with targets at 0.7320, 0.7345 and stop-loss at 0.7240. Validity – 2-3 days.
Short positions can be opened after the breakdown of the level of 0.7255 with targets at 0.7215, 0.7170 and stop-loss at 0.7280. Validity – 2-3 days.