Euro: USD/EUR (EUR=X) in falling channel and expected to extend
The Euro-to-Dollar rate is trading at 1.1215 at the start of the new week, virtually unchanged from the week before owing to a short-term period of consolidation.
If we take a step back however and consider the technical perspective, the outlook for the pair is marginally bearish as a short-term downtrend remains intact.
Given the old adage that ‘the trend is your friend’, we expect the pair to continue lower as it maintains a sloping channel.
Nevertheless, there is also sense that the current downcycle leg, which began on March 21, is looking like it may have run its course and could be about to turn higher as the next upcycle begins.
We would, therefore, wish to see a clear break below the 1.1175 level for confirmation of more downside, just in case a new bullish phase is, in fact, about to start.
The pair fell past the November lows last week and almost touched the next major floor at the March lows of 1.1175 (it got as low as 1.1183). After that, it bounced off the March lows and rose for a day before gently falling back down to end the week, to end where it started.
If the pair can resume its downtrend and break below the March lows it is tipped to extend its bear channel lower to a target at 1.1120, where the S1 monthly pivot is situated. This is a level used by traders as a marker for how extended the trend is. It also tends to provide support or resistance to the exchange rate.
The weekly chart adds further weight to the bearish outlook. Three weeks ago a ‘shooting star’ Japanese candlestick pattern formed, which was a bearish sign for the pair.
The fact the shooting start was followed by two more bearish candles increases the chances its could be signalling a continuation lower.
Momentum, as measured by the RSI indicator, on the weekly chart, is not particularly bearishly inclined.
The fact the pair is trading beneath the 200-week moving average (MA), however, continues to be a bearish factor from a technical perspective.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 1.13.
The projected upper bound is: 1.13.
The projected lower bound is: 1.11.
The projected closing price is: 1.12.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 22 white candles and 26 black candles for a net of 4 black candles.
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 60.3603. 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 44.62. 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 167 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 -41. This is not a topping or bottoming area. The last signal was a buy 3 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 sell 8 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed up 0.003 at 1.124. Volume was 66% below average (consolidating) and Bollinger Bands were 21% wider than normal.
Open High Low Close Volume___
1.122 1.125 1.121 1.124 48,768
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.12 1.13 1.15
Volatility: 4 6 8
Volume: 131,758 143,772 141,812
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 1.9% 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 6 periods.