Attached is the weekly chart for EURUSD and lets analyse the weekly trend for EU and try to make some predictions for the upcoming week. Last week saw a one way movement in this pair. All previous resistances were broken, the retracements, if any, were very small and for short periods and the bullish uptrend was there for everyone to see.
On the last day, EU broke thru a major psychological resistance at 1.4000. Ah!! Great thing. One more resistance down and off we go next week, thats what we think. But look closer. Look at the attached 1H chart and look at the price movements when the pair broke through a huge resistance and look at the volume. Is this how the break through a resistance is supposed to happen ?? Note the declining volume... When a major resistance is broken, you expect a long bar with high volume followed by some more high volume bars where other traders join in after the break of resistance, buy more and more and push the prices higher.
That does not seem to have happened here where the break of resistance has happened in low volume. The next 2 days will be crucial for this pair. I would expect a retracement in this pair for atleast 100 pips though the bullish trend is still intact. Support during the retracement would be there at 1.39 and then at around 1.3850. Holiday on Monday could throw a spanner in the works but i would favor a retracement before any more bullish move. It would be interesting to watch PA during the retracement to see if the retracement transforms into a correction or whether we see a continuation of the uptrend after retracement.
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