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Few Simple Risk management Steps. The euro was looking a little more bullish against the dollar at the start of the week, following the bounce of the day SMA and 50 fib level, 3 February lows to 13 March highs.
However, a failure to break previous highs followed by a bearish engulfing pattern on the daily chart suggests the pull back in the pair is not over. Should we see further declines in the pair today, support could be found around the day SMA again, around 1. That said, the lack of upward momentum following the bounce off these previously suggests to me that these levels will be broken, potentially prompting a move back to the That would mean the pair making new lows which would make it appear even more bearish.
The ECB rate decision The average trading range of the pair on the day of the ECB meetings so far this year has been pips. Following the bounce off the trend line and However, the pair was clearly lacking much upward momentum during this time and failed to break previous highs. The 4-hour chart shows that a descending triangle has formed during the consolidation period of the last couple of days, as well as a head and shoulders pattern. A break of this would be very bearish. The medium term outlook for the dollar against the yen is looking very bullish right now, having broken through a few key resistance levels to trade at two-month highs.
However, having rallied strongly for the last five consecutive days, the pair appears to be losing a little momentum. What we are seeing is potential bearish divergence on the 4-hour chart, with the price action making higher highs and the stochastic making lower highs in overbought territory. The MACD also looks like crossing over and at these levels, this has previously been a good signal that a correction is about to happen. The only question now is how big the correction will be. A break of this level would point to a bigger correction, with further key levels of support the coming around Share to Twitter Share to Facebook.
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