CZKEUR closes below its opening price unable to hold early session gains
Czech Koruna/Euro (CZKEUR) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, CZKEUR ended the month 1.63% higher at 0.038105 after losing 26 pips (-0.07%) today. Trading 105 pips higher after the open, the forex pair was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (CZKEUR as at Jul 31, 2020):
Friday's trading range has been 227 pips (0.6%), that's slightly above the last trading month's daily average range of 197 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for CZKEUR. Prices continued to consolidate within a tight trading range between 0.038004 and 0.038231 where it has been caught now for the last three trading days.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. Additionally, two candlestick patterns are matching today's price action, the Bearish Spinning Top and the Bearish High-Wave Candle which are both known as bearish patterns. The last time a Bearish High-Wave Candle showed up on April 2nd, CZKEUR lost -0.88% on the following trading day.
After trading down to 0.038004 earlier during the day, the FX pair bounced off the key technical support level at 0.038004 (S1). The failure to close below the support might increase that levels importance as support going forward. The market was sold again around 0.038231 after having seen highs at 0.038206, 0.038207 and 0.038238 in the last three trading sessions. Obviously there is something going on at that level.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Buying could accelerate should prices move above the nearby swing high at 0.038238 where further buy stops might get activated. Selling could speed up should prices move below the close-by swing low at 0.038004 where further sell stops might get triggered.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish High-Wave Candle" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for CZK/EUR. Out of 95 times, CZKEUR closed higher 57.89% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 63.16% with an average market move of 0.14%.