USDHUF stuck within tight trading range
US Dollar/Hungarian Forint (USDHUF) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
USDHUF finished the week -2.2% lower at 320.8440 after gaining 28745 pips (0.9%) today on low volume. Closing above Thursday's high at 319.6265, the currency confirmed its breakout through the previous session high after trading up to 23130 pips above it intraday.
Daily Candlestick Chart (USDHUF as at May 22, 2020):
Friday's trading range has been 43220 pips (1.36%), that's slightly below the last trading month's daily average range of 19363442 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 USDHUF. Prices continued to consolidate within a tight trading range between 316.4285 and 321.9395 where it has been caught now for the last three trading days.
Even with a weak opening the FX pair 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 May 4th, USDHUF actually lost -0.28% on the following trading day. Additionally, one bullish candlestick pattern matches today's price action, the White Candle.
Prices are trading close to the key technical support level at 313.0000 (S1). The pair was bought again around 317.6175 after having seen lows at 316.4285, 317.7580 and 318.6675 in the last three trading sessions. Obviously there is something going on at that level.
While the market is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could accelerate should prices move above the nearby swing high at 329.1670 where further buy stops might get triggered. Selling could speed up should prices move below the close-by swing low at 316.4285 where further sell stops might get activated. With prices trading close to this year's low at 292.3990, downside momentum could accelerate should USD/HUF break out to new lows for the year.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to previous three Lows" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for USD/HUF. Out of 53 times, USDHUF closed lower 58.49% 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 49.06% with an average market move of -0.29%.
With four out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are GBPUSD losing -0.47% and EURUSD closing -0.44% lower. On the flipside the best performers have been USDCAD closing 0.33% higher and USDCHF gaining 0.08%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDCZK surging 1.09% and EURCZK closing 0.63% higher. The worst performers of the day have been USDMXN tanking -0.58% and SGDHKD closing -0.51% lower. Read more