Germany, the ever so important economy in Euro Area is struggling in terms of inflation. The analysts are expecting the Consumer Price Index to slip in minus, which would mean that the economy is in deflation for the first time since 2009. The forecasted figure is -0.8 while the previous CPI reading was 0.0%, just barely avoiding the deflationary territory.
The weekly charts indicate that the downside momentum in EURGBP might be waning. If price does stay above the current levels until the end of the week we then have a weekly Doji candle. This kind of price action is suggesting a momentum reversal, which should then be followed by a move to higher levels.
EURGBP
Euro has fallen against Sterling over the last month after a longish sideways move above 0.7800. Now the pair has found support at a sideways range from January 2008. The weekly trend is still down but if this week’s low is not violated and the price closes to current levels or slightly above, then we have Doji candle and probabilities of a return move higher increase. Oscillators are oversold with price being outside the lower Bollinger Bands. The support levels are as follows: current weekly low at 0.7405, the previous week’s low at 0.7428 and the resistance levels: current weekly high at 0.7512, a weekly low at 0.7596 and then the range low approx. at 0.7756.
EURGBP, 240 min
The price is attempting to move higher from Bollinger Bands and the fact that this area is close to the pivot candle from 26th helps supporting the price. The upper end of the range with pivot resistance at 0.7511 accompanied with the upper Bollinger Bands looks like a reasonable target for this move. The 38.2% Fibonacci retracement is also located near this level at 0.7523, and the 61.8% retracement coincides with the weekly low from couple of weeks ago, making this level significant should the price test that level.
EURGBP, 60 min
The 60 min chart confirms the indication that price is moving higher from the range bottom.
Conclusion:
If price does stays above the current levels until the end of the week we have weekly Doji candle suggesting a momentum reversal, which should then be followed by a move higher to test the levels identified in the daily chart. As the weekly trend is still down and we have a considerable resistance above, the focus for longer term trades should be in the short side. Those inclined to go with this option should look for momentum reversal signals after price has rallied to higher levels. Both levels (approx. 0.7596 and 0.7756) are worth monitoring for signals. Traders with intraday interest should focus on the edges of the current sideways range and Momentum Reversal Signals at those areas.
For those who would like to learn how to trade professionally, please join me at my free trading webinars. Over the course of the series, I will take you through all the aspects of analyzing the markets and trading them the way the professionals do. Click HERE to register and secure your seat!
Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.
Janne Muta
Chief Market Analyst
HotForex
Markets Wait for German CPI Figures
No comments:
Post a Comment