USDEUR rockets 0.58% on low volume
US Dollar/Euro (USDEUR) Technical Analysis Report for Oct 13, 2020 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, USDEUR finished Tuesday at 0.8514 surging 49 pips (0.58%) on low volume. This is the biggest single-day gain in over three weeks. The bulls were in full control today, moving the market higher throughout the whole session. Closing above Monday's high at 0.8484, the pair confirmed its breakout through the previous session high after trading up to 41 pips above it intraday.
Daily Candlestick Chart (USDEUR as at Oct 13, 2020):
Tuesday's trading range has been 63 pips (0.74%), that's above the last trading month's daily average range of 54 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for USDEUR. Prices continued to consolidate within a tight trading range between 0.8451 and 0.8529 where it has been caught now for the whole last trading week.
Despite a weak opening the market managed to close above the prior day's open and close, forming a bullish Engulfing Candle. The last time this candlestick pattern showed up on October 2nd, USDEUR actually lost -0.59% on the following trading day. Additionally, two candlestick patterns are matching today's price action, the White Candle which is known as bullish pattern and one bearish pattern, the Bearish Hikkake Pattern.
USD/EUR managed to close back above the 50-day moving average at 0.8474. After having been unable to move lower than 0.8455 in the previous session, the currency found buyers again around the same price level today at 0.8462.
The Dollar shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying might accelerate should prices move above the close-by swing high at 0.8529 where further buy stops could get triggered. As prices are trading close to October's high at 0.8550, upside momentum might speed up should the FX pair mark new highs for the month.
Among the 14 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bullish Break through SMA 50" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for USD/EUR. Out of 115 times, USDEUR closed lower 59.13% 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 54.78% with an average market move of -0.10%.