Euro/Dollar: Hammer on the Daily

Hourly

Yesterday’s Trading:

The calendar was empty on Tuesday, so the euro/dollar headed unhindered to the 90th degree. My yesterday’s expectations were fulfilled in full, but the daily closed with a hammer after there was a bounce from 1.0673.

Main news of the day:

• 11:30 EET, UK labor market data: number of unemployment benefit applications for October, ILO unemployment level; average earnings level, September employment creation;

• 12:30 EET, BoE’s Mark Carney to speak;

• 15:15 EET, ECB’s Mario Draghi to speak.

Market Expectations:

The hammer means that there’s a upward correction to 1.0830. The signal for a strengthening of the euro is already active. There is just one little thing: the bulls have met the trend line. To get past it, the euro needs to rebound to 1.0716. The bounce will allow for the indicators to unload.

Wednesday is also bare from a news point of view. Although, Draghi and Carney are set to speak. If they don’t mention monetary policy, the low market volatility will remain until tomorrow. Today is a holiday in the US, so it would seem silly to risk opening new positions. The market could swing on UK labor market data.

Technical Analysis:

• Intraday target maximum: 1.0775, minimum: 1.0715, close: 1.0740;

• Intraday volatility for last 10 weeks: 119 points (4 figures).

The euro/dollar has renewed from a minimum of 1.0673 to the trend line. A hammer has formed on the daily. This means that the risks of a deep correction are there. The holiday in the US could cancel the bull signal. As we know, on a thin market like today it’s easy for stops to be set off above 1.0790. On my forecast I’ve gone for a return of the rate to the 45th degree and then a sideways until Thursday.

Daily

The bears didn’t manage to reach the interim 1.0650 target. The fall stopped at 1.0673. Due to the hammer, it’s now worth considering a correction. It would be better if the price stopped below 1.0790 until Friday. In this case it could be cancelled. Now to the Weekly.

Weekly

The euro/dollar has updated the minimum but didn’t manage to pass through the support. I’m still waiting for the euro to fall to 1.0520 (14/04/15 minimum).