I noted in my w/e analysis how the E/U had formed, surprisingly, a bullish reversal weekly ‘Inverted Hammer’ candle. This was in contrast to the potential daily chart Bear Flag though but, whilst this ‘Flag’ hasn’t been avoided yet, it is looking like the weekly candle is trumping technicals here for the time being.
E/U weekly Cloud: the bullish-reversal candle seems to be on track:
E/U 4hr: the E/U had looked like it might break down from the ‘Bear Flag’ yesterday but the USD weakness that developed during the US session undermined this potential. Price is now stalled at the resistance of the monthly 200 EMA. A new close and hold above this level would suggest continuation though.
EURX daily: the bullish daily breakout for the EURX from its 6 month trading channel would support this move on the E/U:
E/U daily: the daily chart shows the potential still present for the ‘Bear Flag’. I will only be convinced of trend line breaks that come during the busier London/US sessions though, as per my earlier VIX post. Any bullish close above the monthly 200 EMA would have me looking for a test of the 1.30 level and, then, the region of the weekly and 4hr 200 EMA followed by the 61.8% fib and then the 1.35 level.
USDX daily Cloud: The E/U has been gaining primarily due to to USD weakness. The USD index is pulling back from the resistance of a monthly bear trend line. It is currently below the 4hr Cloud and the next level of support to kick in comes from the daily Cloud.
USDX daily: A close below the daily Cloud will have me looking for a test of the pivotal 61.8% fib near the key S/R level of 81.50. The USDX is worth watching to help gauge the next move for the E/U. Continued USDX weakness will support the E/U:
Summary:
- The E/U is currently trading within a ‘Bear Flag’ pattern.
- Watch for ‘Flag’ and monthly 200 EMA trend line breaks during the London/US sessions to gauge the next directional move for the E/U.
- Continued USD weakness will help to support the E/U.