HUFUSD finds buyers at key support level
Hungarian Forint/US Dollar (HUFUSD) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
HUFUSD ended the week 2.25% higher at 0.0031168 after losing 282 pips (-0.9%) today on low volume. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 0.0031287, the forex pair confirmed its breakout through the previous session low after trading up to 225 pips below it intraday.
Daily Candlestick Chart (HUFUSD as at May 22, 2020):
Friday's trading range has been 422 pips (1.34%), that's slightly below the last trading month's daily average range of 1900 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 HUFUSD.
Regardless of a strong opening the FX pair closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
After trading down to 0.0031062 earlier during the day, HUF/USD bounced off the key technical support level at 0.0031094 (S1). The failure to close below the support might increase that levels importance as support going forward. When prices bounced off a significant support level the last time on April 24th, HUFUSD gained 0.33% on the following trading day.
While the pair is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Buying might speed up should prices move above the nearby swing high at 0.0031603 where further buy stops could get activated. Selling might accelerate should prices move below the close-by swing low at 0.0030380 where further sell stops could get triggered.
Among the seven 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 HUF/USD. Out of 90 times, HUFUSD closed lower 60.00% 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 47.78% with an average market move of -0.03%.