EURUSD still prone to a short squeeze – Confluence Detector

Gonçalo Moreira, CMT Independent Analyst

The EUR/USD managed to break it multi-week range resistance in the 1,15s but the topside attempt was well offered and it came back down at the end of the week.

The Technical Confluences Indicator shows that the pair is capped around 1.1490 where we see a dense cluster including the previous month high, the 5-day SMA and intraday volatility bands and a couple SMAs. The bearish tone will most likely prevail until 1.1440 when buyers could start defending that zone. A break below 1.1430 would mean bears all piling in and 1.1400 1.1350 become their immediate targets. With stops above 1.1540 and 1.1560 (monthly R1 and daily R2 respectively) a rip higher would clean them out and probably squeeze the pair towards the cluster of daily R3 and Fibo extension.

Confluence Detector

The Confluence Detector finds exciting opportunities using Technical Confluences. The TC is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies.

This tool assigns a certain amount of “weight” to each indicator, and this “weight” can influence adjacents price levels. These weightings mean that one price level without any indicator or moving average but under the influence of two “strongly weighted” levels accumulate more resistance than their neighbors. In these cases, the tool signals resistance in apparently empty areas.

Learn more about Technical Confluence

Author

Gonçalo Moreira, CMT

Independent Analyst

As a trader in the foreign exchange market since 2005, Gonçalo Moreira honed his analytic and strategic skills through the Chartered Market Technician (CMT) designation. 

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