USDEUR closes lower for the 4th day in a row
US Dollar/Euro (USDEUR) Technical Analysis Report for Oct 21, 2020 | by Techniquant Editorial Team
Moving lower for the 4th day in a row, USDEUR ended Wednesday at 0.8432 losing 27 pips (-0.32%). Today's close at 0.8432 marks the lowest recorded closing price since September 14th. Closing below Tuesday's low at 0.8445, the currency confirmed its breakout through the previous session low after trading up to 28 pips below it intraday.
Daily Candlestick Chart (USDEUR as at Oct 21, 2020):
Wednesday's trading range has been 42 pips (0.5%), that's below the last trading month's daily average range of 49 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for USDEUR.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 0.8403 (S1).
Crossing below the lower Bollinger Band for the first time since July 27th, prices have shown unusually strong downward momentum in the short-term. This might either indicate a potential selling climax after which prices could head back up towards the mean of the Bollinger Bands at 0.8513 or signal the beginning of a strong momentum breakout leading to even lower prices. The last time prices broke out below the lower Bollinger Band on July 21st, USDEUR lost -0.37% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
With prices trading close to this year's low at 0.8326, downside momentum might speed up should the market break out to new lows for the year.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "4 Consecutive Lower Closes" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for USD/EUR. Out of 81 times, USDEUR closed higher 64.20% 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 10 trading days, showing a win rate of 55.56% with an average market move of 0.16%.