Richard Perry
Independent Analyst
In the context of the daily chart, yesterday’s rebound was staggering. The early morning sell-off which saw the euro down 200 pips subsequently then saw a rally that lasted almost to the close. Not only was the initial opening gap down closed (which is a bullish signal anyway) but the euro also completed a massive bullish engulfing candle (bullish key one day reversal). The big question is whether to trust this as a bullish signal. I always say that the day after a huge candle is just as important, as it is a confirmation candle. Currently the euro is back lower again and the confirmation is not coming through. We must be cautious then. The daily chart shows a mix of neutral momentum indicators. The intraday hourly chart shows that the pull higher from yesterday needs to now find support in the $1.1130/$1.1150 band today to at least give the bulls a good grounding for this rebound, otherwise it will just drift off again. We are still seeing the euro settle down after incredible volatility yesterday, where the technicals have been thrown all over the place.
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