EURUSD returns to 1.14 resistance, en route to the next resistance at 1.165, which is also the level of the 161.8% Fibonacci Extension. However ADX indicated that the strength of the market towards the downside has weakened as the pair continued to retrace for the second day. It remains to be seen that the downside is still favorable for the pair and sellers will be pleased to follow through.
EURUSD was trading slightly bullish yesterday as the candles continued to form higher highs and higher lows, with the impending change of the direction of the 20 SMA. However there is a formation of an engulfing candle together with the Stochastics Oscillator which indicated that the market might have just become slightly overbought, there might be a continuation of the market to trade towards the downside. ADX too shown a possible change to the market’s current direction as the bullish rebound weakens.
Candles continued to form lower highs, which indicated that the market is more favorable towards the downside. Slight crossover of the MACD is noticed just above the level of 0, indicating a bearish retracement and not yet a bullish movement. ADX indicated slight increase in market strength towards the downside. There are no high impact news today directly affecting the Euro, therefore we may not be seeing any unforeseen impact to the pair. In the event that the MACD crosses below the level 0, it may be a slightly favorable short entry towards the support levels in blue.