Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Technical Analysis of EUR/USD

Currencies / Euro Feb 20, 2021 - 02:03 PM GMT

By: Submissions

Currencies

The strength in US long-term yields is beginning to put downward pressure on the Euro as the dollar gains traction. The exchange rate is starting to edge through a critical support level, while the exchange rate is also oversold. Medium-term momentum remains negative, pointing to a lower exchange rate on the EUR/USD. The EUR/USD weekly forex trading chart shows that the currency pair topped out in January and appears to have broken through trend line support. The daily charts show a similar picture but also show that the exchange rate is oversold an might have moved too far too fast.


The Exchange Rate Tops Out in January

In January of 2021, the EUR/USD hit a 31-month high, which seems to be a top in hindsight. The exchange rate has since declined toward support levels, near an upward sloping trend line near 1.20. The currency pair broke through this level briefly in late January and is currently trading below former support now resistance at 1.2075. Target support on the currency pair on a weekly chart is the November lows at 1.16. This level coincides with the 50-week moving average, which comes in near the same level. The exchange rate looks poised to test the February lows, making a lower low and continuing to trend lower.

Medium-term momentum on the EUR/USD is negative on a weekly chart. The AMCD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs as the MACD line (the 12-week moving average minus the 26-week moving average) crosses below the MACD signal line. The MACD histogram also generated a crossover sell signal slicing through the zero-index level. The MACD histogram is printing in negative territory with a declining trajectory, which points to lower prices.

In January, the fast stochastic generated a crossover sell signal in overbought territory. The reading on the fast stochastic when it made the crossover sell signal was 91, well above the overbought trigger level of 80. The fast stochastic continues to accelerate lower, reflecting rising negative momentum.

The daily chart of the EUR/USD is similar. The exchange rate has broken down through trend line support. The 10-day moving average has crossed below the 50-day moving average, which means a medium-term downtrend is now in place.

The daily chart shows that the exchange rate is oversold. The fast stochastic generated a crossover sell signal in oversold territory. The current reading on the fast stochastic is 24, up from a low of 12, reflecting accelerating positive momentum. The relative strength index (RSI) also rebounded sharply in February after heading south in January. This movment also reflects the deceleration of negative momentum. Medium-term daily momentum as reflected by the MACD is negative. The daily MACD histogram is printing in negative territory with a downward sloping trajectory, which points to a lower exchange rate on the EUR/USD.

Summary

The EUR/USD looks like it topped out in January and is trendling lower. Its pierced through trend line support and is poised to test the November 2020 lows at 1.16. Weekly momentum is negative, while daily momentum is mixed. The EUR/USD exchange rate is oversold, and could temporarily rebound following a crossover buy signal generated by the fast stochastic. The daily trend is negative as a moving average crossover points to a negative trend. The technicals point to a lower exchange rate, as as US yields gains traction. The US 10-year yield has hit its highest levels since March of 2020. The dollar is likely to continue to rise against most major currencies putting downward pressure on the EUR/USD.

By S N Chatterjee

Copyright 2021 © S N Chatterjee - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in