Euro: USD/EUR (EUR=X) Little Changed in Holiday Thinned Trading
EUR/USD shows subdued price action in the early day on Monday which is attributed to the Easter Monday holiday. However, volatility has generally slowed and there is a reason to believe this trend may continue.
There was a sharp rise in volatility in late February as the Coronavirus threat started to accelerate. Average weekly price movements rose significantly from that point forward although last week was the first time since late February that the weekly price change was somewhat in line with the prior average.
Granted, the markets have become a bit more optimistic as central banks and governments around the world have stepped up to provide significant easing packages. The aim is to help offset the negative economic of the virus as much as they can. This optimism is best seen in the equity markets.
In the currency markets, that means there is no longer panicked buying of the dollar.
Since late February, there have been two predominant drivers for the EUR/USD exchange rate. The first was a short-covering of euros as the currency is often used to fund more risky trades. This lasted for about two weeks. From there, out of fear, investors started stockpiling the dollar, which drove the exchange rate towards three-year lows.
At this point, there is no longer a driver with the same sense of urgency, and this should translate into a further decline in volatility that favors a range over the foreseeable near-term.
In line with the view of a range, EUR/USD stands to continue trading sideways in the session ahead. This holds especially true because of the Easter Monday holiday.
Near-term support is seen from the lower bound of a rising trend channel although stronger support comes from a horizontal level at 1.0894.
To the upside, resistance remains at 1.1000 which has generally been a respected level over several months now.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1.12.
The projected lower bound is: 1.07.
The projected closing price is: 1.09.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 24 white candles and 25 black candles for a net of 1 black candles.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with FOREX EUR=), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 81.5326. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 4 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 49.95. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 25 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 0. This is not a topping or bottoming area. The last signal was a buy 15 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed up 0.003 at 1.094. Volume was 89% below average (consolidating) and Bollinger Bands were 20% wider than normal.
Open High Low Close Volume___
1.091 1.094 1.090 1.094 9,689
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.09 1.10 1.11
Volatility: 10 14 8
Volume: 100,802 106,937 79,573
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX EUR= is currently 1.0% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of EUR= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on EUR= and have had this outlook for the last 8 periods.
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