Euro: USD/EUR (EUR=X) Expectations are tempered with volatility low

Euro: USD/EUR (EUR=X) Expectations are tempered with volatility low

Euro: USD/EUR (EUR=X) Expectations are tempered with volatility low

CHOPPY EURO PRICE ACTION BUILDING A TRIANGLE

The bad news is that price action of late has been choppy and uninspiring, unless of course you favor mean reversion or range trading, in which case this has been your market. The good news for those looking for some follow through, is that price action is contracting and building a triangle which should give EUR/USD a shove.

The push looks likely to be lower, if trend and tone are dictating. Since early this year the trend has been down and only a couple of times the past few months has the Euro looked like it might threaten to trade materially higher. With a symmetrical wedge forming a breakdown is the likely scenario given it is developing along the path of least resistance and in the absence of oversold conditions.

It may very well take the better part or all of next week before we get a resolution, so hanging tight may be the name of the game next week. Should we see a breakdown it won’t be long before the November low and 1-year underside trend-line are met, which could be enough to stop momentum before another bounce develops. It’s been that kind of market. However, if momentum builds and we see a daily close below the underside trend-line then it looks reasonable to continue riding a bearish bias.

If, however, a top-side breakout develops, failure risk looks high as it not only will a breakout be against the trend but with resistance of various forms standing in the way from the mid-11400s up to the mid-11500s. Standing aside and seeing how things play out at those levels looks like a prudent approach until the Euro can prove it can sustain a move higher. On a deep enough push into resistance around the low-15000s, shorts may become attractive.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 1.15.

The projected lower bound is: 1.12.

The projected closing price is: 1.13.

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 22 white candles and 28 black candles for a net of 6 black candles.

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 62.4128. This is not an overbought or oversold reading. 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 47.90. 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 77 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 -31. This is not a topping or bottoming area. The last signal was a buy 13 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 buy 11 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed up 0.004 at 1.135. Volume was 99% below average (consolidating) and Bollinger Bands were 29% narrower than normal.

Open High Low Close Volume___
1.131 1.137 1.131 1.135 1,412

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 1.14 1.14 1.18
Volatility: 9 8 8
Volume: 134,520 137,091 138,989

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 3.4% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. 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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