Introduction
Last Week, 6E closed with a green bullish hammer on the weekly chart after 10 out of 11 red weeks. A huge decline in value for the Euro. The selling in the Euro has been volatile, with every buy getting sold heavily into. The bears have been in control primarily because the Dollar has been gaining so much strength, and since 6E is priced in Dollars, we are essentially trading the Euro/Dollar pair.
Technical Analysis
There is a high volume node at the current price levels, which would add to the bullish narrative.
The RSI continues its downtrend, currently at 38. Since the RSI is a lagging indicator, we are likely to see a reversal before the RSI confirms it. Regardless of the lag, the RSI has been in a downtrend for over 10 days before touching overbought, and it looks like it could be time for a relief rally, at least in the short term.
The bullish hammer formation from last week must hold its low in order for a possible bullish trend to develop. The levels have been marked on the chart below.
Daily Chart
The daily charts general price action still remains bearish, however. The chart is rolling over once more, and that is why it’s important we watch the 1.048 level above, price must not close below that level for the bullish case to remain intact. A possible bear trap could occur where price wicks down below that level but then swiftly reverses, giving bulls the chance to go long.
