Monday, September 26, 2011
Relief Rally for the Euro Currency?
The Eur/Usd currency pair has been under significant downward pressure for the last few trading days. Today was the first sign of the bulls coming into the market and taking over the reigns. I usually check the daily closes at 5 pm EST to see if I can spot any unopened presents the forex markets may have left for me. Today I got a nice surprise. A few days ago I mentioned in one of my posts [Euro Big Support] that the 1.3400 zone is a very significant pivot and that it may be smart to wait for bullish price action before joining the frenzy. Today on the daily chart a very nice long rejection bar has formed. The tail is very nice and long which to me says a lot of short covering was taking place and a lot of stops were hit. You can see the 1.3400 was rejected with force and the market closes above the open. This is a very bullish sign and we also have bullish divergence that has formed from the 12th of September low to today's low. Lets do a quick recap. We have a huge support from the 1.3400 price level, we have a very significant rejection bar and we have Relative Strength showing seller weakness. I would say we have a good solid case for a possible reversal. Before you get all giddy with excitement, remember that bullish momentum is confirmed IF and only IF that long doji bar breaks its top by a few pips. Enjoy!
Posted by Razor at 2:12 PM