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Syriza Election Victory Did Not Push Euro Lower

Syriza has promised to renegotiate the terms of their debt with the European lenders and is calling for a Europe where tax revenues from northern countries, such as Germany, would be used in Greece to fund the government. This sets Syriza and the new Greek government at a collision course with Germany and other wealthier nations in Europe and could eventually cause Greece exiting the Euro.

The market reactions to news are always interesting and telling. I find it significant that EURUSD, although it is still in a downtrend, has not moved significantly lower on the news Syriza winning the Greek elections. Rather it is ticking higher after the smallish initial drop. This suggests that market participants think that the probabilities of Greece leaving Euro area are now higher. This would be bullish for the currency as it would open the door for other weak economies possibly abandoning the single currency. Euro area would then consist of stronger economies, a reason for the currency to appreciate in value in the long run. Obviously, we have the first ECB QE program just starting and this should mean the pressure on Euro will stay on for quite a while but it does not exclude Euro rallying from time to time and this would give us opportunities against the weaker currencies.

Market reactions are important as was proven with my analysis with Gold. A positive reaction to a news item that should have been negative for Gold hinted that it was time to buy the yellow metal, regardless all the negative fundamental analysis available at the time. This proved to be exactly the right time to buy Gold. Now, this same logic when combined with technical analysis could provide us with a trade opportunity in Euro against weaker currencies.

EURAUD, Weekly

EURAUD, Weekly

After falling for five weeks the pair found support at a weekly pivot low from September 2014 and reacted higher from the general area close to the pivot. This encourages us to look for buy opportunities in EURAUD. The overall trend is sideways and the pair has moved to the lower Bollinger Bands which most of the time means that the momentum might be reversing. Oscillators confirm the setup by being well into oversold territory. Support and resistance levels: 1.3967 and 1.5022. There is also some resistance 1.4223 which could lead to further sideways move between 1.3967 and 1.4223.



The daily trend is down but the price has reached a weekly support area and moved sideways above it for the last week. This resulted in a Doji candle signaling a rejection of the 1.3967 level and indicates an attempt to turn this market higher is at hand. Oscillators point sideways after a period of bullish divergence. Weekly support level is below at 1.3967 and the nearest daily resistance level is at 1.4408.

EURAUD, 240 min

EURAUD, 240 min

Although the longer term trend in this time frame is down we’ve seen sideways movement over the last week. The spikey rejection candle at the 3967 support indicates institutional buying at these levels. Oscillators are pointing higher and should there be moves down to the Bollinger Bands (currently at 4082 and 4040) I would be looking to go long at those levels. The first resistance area at 4329 to 4408 coincides with the upper Bollinger Bands and probably slows the upside momentum down.


Judging from the weekly chart this pair is at support and has potential to move quite a lot higher as the next weekly resistance area is at 1.5022 once the 4h and daily resistance levels are cleared out. There is a rejection candle in the daily and 4h charts, which suggest that the reversal of downtrend is taking place. In addition, the fact that Greek election was won by a radical left wing party increases the probabilities for Greek exit from Euro which would be bullish event for Euro. I am looking at 1.4372 as my first target, then 1.4780 as target two and then target three at 1.5020. There is some resistance 1.4223 which could lead to further volatility between 1.3967 and 1.4223 and could therefore provide us with long entry opportunities at the lower end of the range.You are welcome to utilize my analysis in your trading providing it agrees with your own market observations and analysis.

I will be presenting a Live Analysis Webinar tomorrow. So if you want to learn how to find, analyse and trade above kind of setups you most warmly welcome to join me! Click HERE to register and secure your seat!

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

Janne Muta
Chief Market Analyst

Monday, 26 Jan, 2015 / 10:59

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