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Forex: EUR/USD looking below 1.2750 – David Solin

FXstreet.com (Barcelona) - Trapped inside a 7 pip range for last 5 trading hours, the EUR/USD is last at 1.3079, near the upper bound of this tiny range, ahead of key risk event for the Asia-Pacífic in the form of China trade balance, expected to be released around 02:00 GMT. Even though there has been big squeezes up and down since last Thursday when ECB cut rates to record 0.5%, the pair has been at this same price ever since.

Now, David Solin, analyst at Foreign Exchange Analytics, believes that “a more important top is in place at 1.3240, and with declines below the Apr 1.2750 low ahead,” he says. David was calling for a bullish trend ahead in the previous weeks, but now has changed his mind: “Though the market did indeed push above the Apr 16th high at 1.3200 to a marginal new high at 1.3240 on Apr 1st (50% retracement from the Feb 1st high at 1.3710), it has since reversed quickly lower (failure, often a sign of underlying weakness),” he reckons.

“Still long from the Apr 24th buy at 1.3005 (assuming stops were not raised aggressively on a break above the 1.3200 high as suggested),” David expands. “But at this point, with the likelihood that a more important top is in place at 1.3240, would just take profit here (and even reverse to the short side, currently at 1.3085, for 85 ticks),” he concludes.

Immediate support to the downside for EUR/USD lies at recent session/NY lows 1.0372, followed by Monday's weekly lows at 1.3053, and Friday's/Thursday's lows at 1.3035/2. To the upside, closests resistance shows at Monday's London session lows 1.3091, followed by yesterday's highs at 1.3130, and Monday's weekly highs at 1.3142.

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