EURUSD breaks below key technical support level
Euro/US Dollar (EURUSD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
EURUSD finished the month 4.86% higher at 1.1779 after losing 69 pips (-0.58%) today on high volume. Trading 61 pips higher after the open, the currency 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 (EURUSD as at Jul 31, 2020):
Friday's trading range has been 148 pips (1.25%), that's far above the last trading month's daily average range of 91 pips. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently significantly higher than usual for EURUSD.
Despite a strong opening the pair 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, EURUSD actually gained 0.39% on the following trading day.
Prices broke below the key technical support level at 1.1782 (now R1), which is likely to act as resistance going forward.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Engulfing Candle" stand out. Its common bearish interpretation has been confirmed for EUR/USD. Out of 119 times, EURUSD closed lower 51.26% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 54.62% with an average market move of -0.19%.
With four out of the other six 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 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