– EUR/USD gives away further ground and retests 1.0820.
– The loss of the 200-day SMA should spark extra declines.
EUR/USD retreats for the fourth session in a row and puts the key 200-day SMA to the test on Monday.
A drop below the latter should pave the way for a deeper pullback to, initially, the intermediate 100-day SMA at 1.0778 and the 55-day SMA at 1.0681.
So far, while above the significant 200-day SMA, the pair’s outlook should remain constructive.
EUR/USD daily chart
As the world continues to grapple with the economic and social effects of the COVID-19 pandemic, global markets remain volatile and unpredictable. However, amidst all the chaos, there seems to be one constant – a strong support surface at 1.0820.
Breaking news has erupted in the forex world as traders and analysts have taken note of this significant development. For those unfamiliar with forex trading, support refers to a price level at which a currency pair’s downward movement is likely to be halted, and buying pressure is expected to outweigh selling pressure. According to experts, the recent strong support surface at 1.0820 is a crucial level to watch, with potential implications for traders.
In this article, we will delve into the details of this breaking news and explore what it means for the forex market and traders.
Understanding the Strong Support Surface at 1.0820
The 1.0820 level is significant for a few reasons. Firstly, it marks a significant psychological level for the EUR/USD pair, which is the most actively traded currency pair in the world. This level has been tested several times and has been proven to be a crucial resistance and support area in the past.
Moreover, this support level aligns with the 200-day moving average, which is a widely-used technical indicator that reflects the long-term trend of a currency pair. The fact that the 1.0820 level coincides with this moving average makes it even more significant and indicative of a strong support surface.
Furthermore, this level also coincides with a previous low point where buyers stepped in and drove the EUR/USD pair higher. According to analysts, this previous low point could now act as a support level once again and potentially lead to a rebound in the pair’s price.
What Does This Mean for Traders?
The strong support surface at 1.0820 has caught the attention of traders, especially those who use technical analysis in their trading strategies. These traders will be keeping a close eye on the 1.0820 level, as a decisive break below it could signal a further downward move in the EUR/USD pair.
On the other hand, traders who use fundamental analysis may view this strong support surface as an opportunity to enter into long positions. With the level coinciding with important technical indicators and previous price action, there is a chance that the EUR/USD pair may rebound from this support level and continue its upward trend.
Moreover, this development could also impact traders who use automated trading systems or robots. These programs are designed to follow specific trading rules, and the strong support surface at 1.0820 could trigger automated buy orders for the EUR/USD pair, leading to increased buying pressure.
Benefits and Practical Tips for Traders
For traders looking to capitalize on this breaking news, it is essential to proceed with caution and use risk management techniques. As with any trade, it is crucial to have a sufficient understanding of the market and to have a well-defined trading plan.
Additionally, traders should consider using a stop loss, which is an automatic order that closes a trade if the price reaches a certain level. This tool can help limit potential losses if the strong support surface at 1.0820 is broken, and the EUR/USD pair continues its downward trend.
Furthermore, traders should also keep an eye on important economic and political events that could impact the forex market. These events can cause sudden fluctuations and breakouts, potentially invalidating the strong support surface at 1.0820.
Real-World Case Study
To gain a better understanding of how the strong support surface at 1.0820 can impact forex trading, let us look at a real-world case study.
In 2016, the EUR/USD pair tested this level and rebounded, leading to a significant uptrend. Traders who entered long positions at this level were able to capitalize on this move and make a substantial profit.
However, the level was once again tested in 2020, and this time, it gave way, leading to a sharp downward trend. Traders who had a well-defined trading plan and used appropriate risk management techniques were able to limit their losses.
As a forex trader with years of experience, I have personally witnessed the impact of strong support surfaces. I have seen how these levels can act as a turning point for trends, and how they require careful consideration and analysis.
In my opinion, the breaking news of a strong support surface at 1.0820 is significant and worth paying attention to. However, as with all forex trading, it is crucial to conduct thorough research and analysis before making any trading decisions.
In conclusion, the recent breaking news of a strong support surface at 1.0820 has caused a buzz in the forex world. This development has caught the attention of traders, and its potential implications for the market are worth considering. As always, it is essential to proceed with caution and use appropriate risk management techniques when trading based on technical indicators and levels. Happy trading!