EUR/USD - Inside day candle & bullish MA crossover, OI jumps, what's next?

Broad based USD selling on Friday during the North American session saw the EUR/USD pair retake the rising trend line (drawn from Apr 17 low and May 11 low). The spot closed at 1.1196 and traded flat around 1.12 handle in the Asian session today. 

Has the pullback ended?

The daily chart of the EUR/USD pair shows a bullish inside day candle and a bullish 100-DMA and 200-DMA crossover. All major averages - 50-DMA, 100-DMA and 200-DMA are now sloping upwards and perfectly positioned one below the other. 

Inside day candle - price action is within previous day’s price range - signals indecision. Friday’s bullish inside day candle and a jump in the open interest in the June Euro futures (by 11, 631 contracts) could be an indication that the pull back from the recent high of 1.1296 has ended. However, bulls would still want to see a convincing break above 1.1296, coupled with a further addition in the futures OI and Volume.     

Light data calendar

The Eurozone construction PMI due at 09:00 GMT could go unnoticed. German Bundesbank President Weidmann is scheduled to speak at 15:00 GMT. Weidmann could comment in favour of QE taper, but being a renowned hawk, his comments won’t come as a surprise to the markets. 

The American dollar may regain the post-Fed bid tone if the Fed policymakers - William Dudley and Evans - scheduled to speak at 12:00 GMT and 23:00 GMT, respectively, defend last week’s Fed’s hawkish rate hike. 

EUR/USD Technical Levels

A break above 1.1210 (1-hour 200-MA) would expose post-Fed high of 1.1296. Only a daily close above the same would signal continuation of the rally from the January low of 1.0341 and could yield 1.1366 (Aug 2016 high) and 1.1467 (May 2015 high). 

On the downside, a break below 1.1166 (June 9 low) would open doors for 1.1132 (June 15 low) and 1.1012 (50-DMA). 

Doji on weekly chart

Last week’s candle was a Doji, which signals indecision/exhaustion of the bull rally from 1.0341 (Jan low). A negative follow-through this week would be read as a sign of trend reversal. 

  TREND INDEX OB/OS INDEX VOLATILY INDEX
15M Bearish Neutral Low
1H Bullish Neutral Low
4H Bullish Neutral Low
1D Bullish Neutral Expanding
1W Slightly Bullish Overbought High

 

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