EURHKD stuck within tight trading range
Euro/Hong Kong Dollar (EURHKD) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
EURHKD finished the month 1.14% higher at 8.7064 after edging lower 70 pips (-0.08%) today. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (EURHKD as at Jun 30, 2020):
Tuesday's trading range has been 552 pips (0.63%), that's far below the last trading month's daily average range of 729 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for EURHKD. Prices continued to consolidate within a tight trading range between 8.6734 and 8.7486 where it has been caught now for the last three trading days.
One bearish candlestick pattern matches today's price action, the Bearish Spinning Top.
Unable to break through the key technical resistance level at 8.7279 (R1), the currency closed below it after spiking up to 8.7286 earlier during the day. The failure to close above the resistance could increase that levels significance going forward. When prices bounced off a significant resistance level the last time on June 19th, EURHKD actually gained 0.75% on the following trading day. The forex pair was bought again around 8.6734 after having seen lows at 8.6927, 8.6768 and 8.6731 in the last three trading sessions. Obviously there is something going on at that level.
While the FX pair is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could speed up should prices move above the nearby swing high at 8.7486 where further buy stops might get triggered. Selling could accelerate should prices move below the close-by swing low at 8.6731 where further sell stops might get activated. With prices trading close to this year's low at 6.5154, downside momentum could speed up should the market break out to new lows for the year. As prices are trading close to June's high at 8.8524, upside momentum might accelerate should the pair mark new highs for the month. Further selling could move prices lower should the market test May's nearby low at 8.3454.
Among the 10 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. Though it is usually interpreted as bearish, it has actually shown to be bullish for EUR/HKD. Out of 68 times, EURHKD closed higher 58.82% 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 55.88% with an average market move of 0.33%.
With four out of the seven Major FX Pairs closing higher today, the ones that stand out on the positive side are GBPUSD gaining 0.82% and NZDUSD closing 0.53% higher. On the flipside the worst performers have been USDCAD closing -0.62% lower and USDCHF losing -0.41%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been GBPZAR surging 1.31% and GBPJPY closing 1.16% higher. The worst performers of the day have been USDNOK tanking -1.51% and EURGBP closing -0.9% lower. Read more