Euro Turning Bullish?
This week, the euro is rebounding against a multi-month decline across the board. We noted that the EUR/USD is forming an inverted head and shoulders. Now, let’s take a look at the EUR/JPY, EUR/GBP, and EUR/AUD to assess this bullish attempt.
The EUR/JPY fell from a September high of 141.22 to a low of 136.55 this week. Today (10/8). price is rebounding after forming a mini-bottom. The rally is now pushing above a falling speedline, signaling a possible bullish correction. The 137.75-137.95 support/resistance area will be key for the 10/8 session. If price fails to break above this level, the EUR/JPY remains bearish and has downside risk towards 136.00.
If price pops up above 138.00, we can start considering a bullish reversal. But another dip that holds above 137.00 can add weight to this bullish scenario. To accompany this bullish outlook, we should also see the RSI push at least above 60 to show loss of bearish momentum.
The 4H EUR/GBP chart shows a rounded bottom and the break above a falling trendline from early September. The RSI has also shown the loss of bearish momentum.
Price is now pushing at 0.79 and the 200-period SMA in the 4H chart. This is also a previous support area in September. A break and hold above 0.79 this week can lead to further bullish correction, but we should note that the prevailing trend has been heavily bearish, so we should keep a bullish outlook limited to 0.80 for now. A hold below 0.79 maintains a bearish bias despite this week’s bullish correction.
The EUR/AUD has been bullish in September, and has been consolidating under 1.4587 since late September. This week, after a low of 1.4314, price rallied, pushing back above the 100-, and 50-period SMAs, as well as a falling trendline from that 1.4587 high. Note that the 4H RSI has held above 40 after tagging 70 back in September. This shows maintenance of the bullish momentum. With the technical signals in the 4H chart, EUR/AUD appears to have initiated a bullish continuation scenario.
If we are looking for euro strength, EUR/AUD appears to be ripe for it. EUR/JPY is neutral, and EUR/GBP has a sharp prevailing downtrend, and could be the best of these three as candidate for bearish continuation.
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