Euro: USD/EUR (EUR=X) to be impacted by June PMIs

Euro: USD/EUR (EUR=X) to be impacted by June PMIs

Euro: USD/EUR (EUR=X) to be impacted by June PMIs

It’s a busy week ahead for the Sterling and Euro and therefore volatility could be elevated: Sterling has the Bank of England and Boris Johnson to consider while the ECB’s Sintra conference could see the Euro hit with a surprise. Technicals however advocate for further losses in GBP/EUR.

Pound Sterling is trading at around at 1.1204 against the Euro at the start of the new week, a quarter of a cent lower than the previous week’s close. Studies of the charts suggest the exchange rate is set to continue its downtrend in the days ahead.

A break below the 1.1192 lows would provide confirmation of a continuation down to a target at 1.1125 in the short-term.

1.1125 is where the monthly pivot is situated, a level used by traders to gauge the strength of the trend. Pivots are also levels of support and resistance in themselves. It is a medium-strength support level which is likely to provide a floor for prices.

The daily chart tells a similar story – the pair is in an established downtrend which is likely to extend to a target at 1.1045 over the next 1-4 weeks.

The difference with the daily chart, however, is that the RSI momentum indicator is in the oversold zone, which is below 30, and this means the downtrend could be at risk of stalling over the medium-term.

It is highly likely that although it will go lower, the downtrend will now be broken up by periods of intervening, sideways consolidation.

Nevertheless, we still see it as likely to continue down to an initial target at 1.1125 first, and then after some range-bound trading, eventually to a second target at 1.1045.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.13.

The projected lower bound is: 1.11.

The projected closing price is: 1.12.

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 26 white candles and 24 black candles for a net of 2 white candles.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

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 12.5002. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 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 47.88. 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 217 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 -39. This is not a topping or bottoming area. The last signal was a sell 3 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 0 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed up 0.001 at 1.122. Volume was 99% below average (consolidating) and Bollinger Bands were 32% wider than normal.

Open High Low Close Volume___
1.121 1.122 1.120 1.122 1,752

Technical Outlook
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 1.13 1.12 1.14
Volatility: 6 5 7
Volume: 74,257 100,850 131,612

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 1.3% below its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 9 periods.

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