Weekly Candle Print To Keep EUR/USD Bid
Last week, EUR/USD shot up higher on Monday but then held in a range for the remainder of the week. Nevertheless, it held nears highs into the close which has resulted in a reversal candlestick pattern on a weekly chart.
The morning star candlestick pattern stands to keep EUR/USD bid on dips in the upcoming week and hints that the pair might be trying to form a bit of a base here on a weekly chart.
In the week ahead, there is not a lot of data that stands to really move the markets. The highlights will likely be US CPI data on Tuesday and retail sales on Thursday. I expect the markets will continue to focus on any ongoing developments in the trade war. If there isn’t any progress, I would expect a further slowing of volatility in the EUR/USD pair.
As mentioned, EUR/USD posted a reversal candlestick on a weekly chart, and so I expect that dips will be short-lived. Because of this pattern, I have a slight upside basis for the pair even though it is currently breaking lower from a range.
In several of the prior daily forecasts, I mentioned that there is significant overhead resistance here, and that will be something that I think might continue to block rallies, at least in the early week.
Specifically, the resistance in play here is the 50 and 100-day moving averages on a daily chart. On a 4-hour chart, the 200 moving average and a declining trend line capped recent gains.
However, if we do break above this resistance area in the upcoming week, I think it would offer a strong bullish signal for the near-term directional bias.
In the meantime, EUR/USD is seen breaking lower, with some momentum, after spending four sessions ranging below this resistance. On a 4-hour chart, the pair is on pace to post a bearish candle that engulfs much of the recovery that took place from Thursday.
The first area of support comes in at 1.1155. This level had acted as resistance on several attempts in late July. If it fails to hold the pair, I see further support at 1.1118 which is considered to be a major level on a daily chart.
- EUR/USD has broken down from a range in early trading on Monday.
- Dips are likely to be bought as a result of a weekly bullish reversal pattern.
This article was originally posted on FX Empire
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