Forex News: Bulls Dominate the Market but Technical Indicators Enter Deep Overbought Territory. Pullbacks Forthcoming?
Forex News: Friday the German IFO Business Climate posted an all-time high figure of 117.5, thus allowing the Euro to make significant advances against an already weak US Dollar and to finish the day almost 100 pips higher.
Momentum is clearly bullish and the pair broke a very important zone of resistance (1.1860 – 1.1875) but these types of moves are usually followed by a pullback or at least a period of sideways movement. The Relative Strength Index and Stochastic are deep in overbought territory, thus increasing the chances of a retracement lower.
The only notable release of the day is the U.S. New Home Sales, a report that shows how many houses were sold during the previous month. The expected number is 627K (annualized format) and a higher reading shows increased economic health, thus strengthening the greenback but the impact is medium.
Price action was mostly bullish Friday and the pair broke the resistance at 1.3320, reaching a high at 1.3360 before retracing lower. The US Dollar continues to be on the retreat, with only minor signs of strength.
After an almost perfect bounce at 1.3280, which is now support, the pair exited the long term range by breaking the resistance at 1.3320. Price action during the next few days will show whether the break was true or not and until then, the levels to watch are 1.3360 (Friday’s high) as potential resistance and of course 1.3320, which may turn into support.
The United Kingdom didn’t schedule any economic releases for today, so the technical aspect and the U.S. home sales numbers will decide market direction.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 7-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.