Macro technical analysis of EUR-USD
- Euro-dollar (EUR-USD) continues to extend its gains for the fifth session in a row: the dollar has fallen after weaker than expected CPI data and the euro has found support from the ECB’s optimism
- On Thursday, the pair broke above the upper boundary of a well-defined downward-sloping equidistant channel that extends back to May 2018. This could be the first signal of a reversal but traders should await confirmation that might come from a close above the pattern for a second consecutive day
- With the ADX at 17.6, we take confidence from signals derived from stochastics that have recently completed a bullish crossover. This underscores our bullish outlook in the short term and the view that the channel’s violation will hold
- On the flip side, candles are on course to complete an ‘Advance Block’ pattern, which is a major bearish signal. If the day ends with a small positive candle, this could be an indication of a reversal lower which could see price action returning to the range of the channel
- Support comes at the boundary level and at $1.1575. Resistance is found a bit higher at the 200DMA and at $1.1759
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