Euro: USD/EUR (EUR=X) faces immediate resistance on charts this week
The Euro received a last minute leg-up ahead of the holiday weekend after Eurogroup finance ministers agreed on a fiscal support package for the bloc’s economies, although it’s facing immediate resistance on the charts and technical analysts say it could now range-trade for a while.
Europe’s single currency closed the week 1.25% higher against the Dollar after shiting back into the black against the greenback as Eurozone finance ministers edged closer toward agreeing a European financial contribution to the coronavirus containment effort in the bloc’s weaker economies.
The upward move was aided by weakness in the Dollar, which slumped while risk currencies rallied alongside stock markets that have now recovered from nearly half their historic March declines. Hopes that coronavirus’ advance on the world economy is slowing were behind the moves, which leaves investors taking cues from the daily disclosures of new coronavirus infections and deaths in order to gauge whether the slowdown is being sustained.
Last week’s gains lifted the Euro-to-Dollar rate further off the lows seen in the early days of April although they were not enough to lift it above the downward sloping trendline, or “accelerated downtrend” that began in March and which now litters the immediate path ahead. From the perspective of technicians, overcoming that level is necessary for the Euro to develop an upside bias.
“It looks likely to range near term. Failure at 1.0773 will target the 1.0636 March low and then 1.0340, the 2017 low. The market will find initial resistance at the accelerated downtrend at 1.0967 ahead of the 61.8% retracement at 1.1148/67 and while capped here will remain offered,” says Karen Jones, head of technical analysis for currencies, commodities and bonds at Commerzbank.
Jones has a neutral outlook for the Euro-to-Dollar rate over the short and medium-term, which covers the next three weeks and three months respectively, although she’s advocated ‘short positions’ to Commerzbank clients for the time being given that the single currency is at the top of what is anticipated to be a relatively narrow short-term trading range. She and the Commerzbank team entered their trade at 1.0830 and 1.0870 but have stop-losses at 1.0960.
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 black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 23 white candles and 26 black candles for a net of 3 black 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.
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 89.6103. 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 49.35. 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 24 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 11. This is not a topping or bottoming area. The last signal was a buy 14 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 0 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed unchanged at 1.094. Volume was 86% below average (consolidating) and Bollinger Bands were 23% wider than normal.
Open High Low Close Volume___
1.094 1.095 1.092 1.094 12,277
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: 108,048 107,171 79,628
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 1.1% 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 7 periods.