Euro: USD/EUR (EUR=X) Approaches a Major Barrier

Euro: USD/EUR (EUR=X) Approaches a Major Barrier

Euro: USD/EUR (EUR=X) Approaches a Major Barrier

Following a momentum-driven decline in the early part of the month, EUR/USD has gained some ground and is recovering on the back of some broad-based dollar weakness.

However, I think the pair will struggle to cross a major barrier that falls at 1.1072. If it fails to do so, I expect the markets will continue to focus on the downside.

The mentioned level is important for several reasons. First, this price point has been well-respected on a daily chart. It has acted as both support and resistance since the pair first declined towards it in late August.

But more importantly, the level marks the breakout point of a double pattern that has been in play for just over a week now. The measured move target for the pattern falls at 1.0970. Last week’s decline fell about 20 pips short of reaching it.

I’m not ruling out the possibility that the pair has made a meaningful bottom at this point. And along the same lines, that it will not complete the pattern. But having said that, it might be premature to start looking at the long side.

Bottom Line

  • EUR/USD is showing some upward momentum after finding support in around the 1.10 level.
  • A horizontal level at 1.1072 offers major resistance. I expect that the pair will struggle to scale it, at least in the session ahead.
  • A sustained break above 1.1072 stands to shift the near-term bias back to bullish, in line with the price action and trend from October.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.12.

The projected lower bound is: 1.10.

The projected closing price is: 1.11.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 84.0582. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 3 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 52.26. 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 buy 55 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 7. This is not a topping or bottoming area. The last signal was a buy 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 10 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed up 0.000 at 1.107. Volume was 95% below average (consolidating) and Bollinger Bands were 10% narrower than normal.

Open     High      Low     Close     Volume___
1.107 1.107 1.107 1.107 3,582
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.10 1.10 1.12
Volatility: 3 6 6
Volume: 58,476 70,633 94,977

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.

Summary

FOREX EUR= is currently 0.9% 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 4 periods.

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