Euro: USD/EUR (EUR=X) continues to trade in a fairly tight range

Euro: USD/EUR (EUR=X) continues to trade in a fairly tight range

Euro: USD/EUR (EUR=X) continues to trade in a fairly tight range

With concerns over the Coronavirus mounting this week, risk assets have seen volatile price swings while the euro has been little changed against the greenback.

The currency pair found a floor yesterday after a brief dip below the psychological 1.1000 handle but continues to trade in a fairly tight range.

The Federal Reserve held interest rates unchanged as expected on Wednesday. Chair Powell brought up concerns regarding inflation which suggests another rate cut can’t be completely ruled out at this point. While the next policy could go either way, the bar appears to be high at this point for a rate increase.

Powell further talked about the potential for a recovery in the global economy following the recent progress in the US-China trade war but expressed concerns over the Coronavirus outbreak. Powell noted that if China’s economy deteriorates as a result of the virus, the US economy will also be impacted, although not at the same degree as some of China’s neighboring countries.

The Bank of England will meet later today which could spark some fireworks among the Sterling pairs. The markets have been trying to assess whether the BoE will cut rates over the past few weeks but are going into the meeting with uncertainty on how policymakers will act.

Technical Analysis

EUR/USD found support yesterday from a horizontal level at 1.0991 and the lower bound of a trend channel that has encompassed price action since the start of the month.

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 1.11.

The projected upper bound is: 1.11.

The projected lower bound is: 1.10.

The projected closing price is: 1.10.

Candlesticks

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 27 white candles and 22 black candles for a net of 5 white 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 (which appears to be the case with FOREX EUR=). It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend, 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 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 27.9072. This is not an overbought or oversold reading. The last signal was a buy 0 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 39.14. 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 107 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 -83. This is not a topping or bottoming area. The last signal was a buy 0 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 16 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed up 0.002 at 1.103. Volume was 12% above average (neutral) and Bollinger Bands were 10% wider than normal.

Open     High      Low     Close     Volume___
1.101 1.104 1.100 1.103 71,255
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.11 1.11 1.11
Volatility: 4 5 5
Volume: 59,669 57,347 75,232

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 9 periods.

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