At the beginning of last week we identified a Hammer at the trend line supporting EURUSD confirmed by a bullish candle. This led us to hold with our bullish bias, entering long at just above 1.5660 and targeting a test of the psychologically important 1.6000 mark. Though upside momentum materialized as we expected, our target was not reached. Price action stalled just below 1.5900, making a triple top. Still, with a close at 1.5826 the week yielded 166 pips in profit.
Looking ahead to this week, we see that the weekend’s G7 communiqué has buoyed the US dollar across all the majors. If the current EURUSD candle closes as-is, we will see a Bearish Engulfing and a break of the established bullish tend line. This would change our bias to favor the downside, and likely spark a major selloff in EURUSD. Should the candle close above the trend line, the bullish trend will remain intact and we will be looking for a buying opportunity. We are not able to make a reliable trading decision until today’s candle closes, and will wait for confirmation in tomorrow’s price action.
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