Euro: USD/EUR (EUR=X) Needs to Hold 1.1209 to Sustain Short-Covering Rally
The Euro finished higher against the U.S. Dollar on Tuesday as investors continued to express optimism in the growth prospects of the global economy amid the easing of tensions between the United States and China.
Although the Euro is rising, it’s actually the weaker U.S. Dollar that is driving the single-currency higher. After posting a strong performance for most of the year, the greenback has been on a price slide side mid-December when Washington and Beijing announced Phase One of their trade agreement. The news reduced the dollar’s appeal as a safe-haven asset.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. Taking out the December 25 high at 1.1313 will signal a resumption of the uptrend. The main trend will change to down on a trade through 1.1067.
The major range is 1.1413 to 1.0879. Its retracement zone is 1.1209 to 1.1146.
Long-term Fibonacci support is 1.1185.
The near-term range is 1.0879 to 1.1313. Its retracement zone is 1.1096 to 1.1045.
After clawing through a series of retracement levels, the EUR/USD is now in a position to expand the rally to the upside. Holding above the Fib level at 1.1209 will indicate the presence of buyers. If the rally gains traction over the near-term then don’t be surprised by an eventual test of the June 25 top at 1.1413.
It all comes down to the direction of the U.S. Dollar. Keep in mind that the greenback isn’t going down because the U.S. economy is weak. It is dropping because of safe-haven liquidation. The Euro is being boosted by a bullish outlook for the Euro Zone economy now that there is a trade deal in place, but at some point investors are going to ask for the evidence.
Reuters said on Friday that analysts did not attribute the move in the Euro to any specific new developments.
“I can’t see much reason for the movement in the FX market except end-year position squaring, or just being careful and cutting positions ahead of the New Year’s holiday and the start of 2020. As a result I wouldn’t draw any big conclusions from it,” said Marshal Gittler, currency analyst at ACLS Global.
The rally in the EUR/USD is mostly being driven by short-covering also. This first leg up took out some of the shorts. The real buyers will have to come in on the next correction to convince me that the single-currency will be moving higher over the near-term.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 1.11.
The projected upper bound is: 1.13.
The projected lower bound is: 1.11.
The projected closing price is: 1.12.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 28 white candles and 21 black candles for a net of 7 white candles.
A doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.
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 82.9519. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 5 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 69.11. 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. (ERROR: Function did not return a value)
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 138.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 10 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 2 period(s) ago.
Rex Takasugi – TD Profile
FOREX EUR= closed up 0.000 at 1.121. Volume was 99% below average (consolidating) and Bollinger Bands were 7% narrower than normal.
Open High Low Close Volume___
1.121 1.122 1.120 1.121 379
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.11 1.11 1.11
Volatility: 5 4 5
Volume: 40,134 59,179 81,574
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 0.6% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 bullish on EUR= and have had this outlook for the last 15 periods.
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