EURHKD breaks below Thursday's low
Euro/Hong Kong Dollar (EURHKD) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, EURHKD finished the week 0.84% higher at 8.4564 after losing 357 pips (-0.42%) today. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 8.4817, EUR/HKD confirmed its breakout through the previous session low after trading up to 387 pips below it intraday.
Daily Candlestick Chart (EURHKD as at May 22, 2020):
Friday's trading range has been 523 pips (0.62%), that's slightly below the last trading month's daily average range of 46116860184271776 pips. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for EURHKD.
One bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on May 11th, EURHKD actually gained 0.38% on the following trading day.
Prices are trading close to the key technical resistance level at 8.6168 (R1). The market was bought again around 8.4430 after having seen lows at 8.4817, 8.4627 and 8.4502 in the last three trading sessions. Obviously there is something going on at that level.
Although the currency is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Buying could accelerate should prices move above the close-by swing high at 8.5359 where further buy stops might get triggered. Selling could speed up should prices move below the nearby swing low at 8.3514 where further sell stops might get activated. With prices trading close to this year's low at 6.5154, downside momentum could accelerate should the pair break out to new lows for the year. As prices are trading close to May's high at 8.5422, upside momentum might speed up should the FX pair mark new highs for the month. As prices are trading close to May's low at 8.3454, downside momentum could accelerate should the forex pair mark new lows for the month.
Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to prior three Highs" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for EUR/HKD. Out of 41 times, EURHKD closed higher 58.54% 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 five trading days, showing a win rate of 51.22% with an average market move of 0.20%.
With four out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are GBPUSD losing -0.47% and EURUSD closing -0.44% lower. On the flipside the best performers have been USDCAD closing 0.33% higher and USDCHF gaining 0.08%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDCZK surging 1.09% and USDHUF closing 0.9% higher. The worst performers of the day have been USDMXN tanking -0.58% and SGDHKD closing -0.51% lower. Read more