EURHKD closes below its opening price unable to hold early session gains
Euro/Hong Kong Dollar (EURHKD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
EURHKD ended the month 4.86% higher at 9.1292 after losing 527 pips (-0.57%) today on high volume. Trading 474 pips higher after the open, the FX 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 missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (EURHKD as at Jul 31, 2020):
Friday's trading range has been 1142 pips (1.24%), that's far above the last trading month's daily average range of 689 pips. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for EURHKD. Prices continued to consolidate within a tight trading range between 9.0234 and 9.2293 where it has been caught now for the whole last trading week.
In spite of a strong opening the market closed below the previous day's open and close, forming a bearish Engulfing Candle. The last time this candlestick pattern showed up on July 16th, EURHKD actually gained 0.40% on the following trading day.
Prices are trading close to the key technical support level at 8.5208 (S1). The forex pair was bought again around 9.1151 after having seen lows at 9.0915, 9.0777 and 9.0670 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.
Selling could accelerate should prices move below the nearby swing low at 8.8164 where further sell stops might get triggered. With prices trading close to this year's low at 6.5154, downside momentum could speed up should the currency break out to new lows for the year. Trading close to May's low at 8.3454 we might see further downside momentum if potential sell stops at the level get activated.
Among the 11 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 91 times, EURHKD closed higher 62.64% 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 67.03% with an average market move of 0.51%.
With five out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are NZDUSD losing -1.04% and AUDUSD closing -0.72% lower. On the flipside the best performers have been USDJPY closing 1.12% higher and USDCHF gaining 0.48%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDZAR surging 1.87% and GBPZAR closing 1.79% higher. The worst performers of the day have been NZDCAD tanking -1.15% and NZDHKD closing -1.05% lower. Read more