The EURUSD currency pair moves without a clear direction recently. Since it reached close to the 1.20 level, it was not able to push higher, nor lower. Every dip is being bought, while every attempt on a bullish breakout is being sold.
However, it only means that traders must look at the lower timeframes in search for a quick trade. By doing so, a rising wedge and a bearish divergence formed this week as the price bounced from 1.17.
Powell Speech to Move the EURUSD Pair
Federal Reserve Chair Jerome Powell is due to speak at the National Association of Business Economics. The topic is the U.S. economic outlook, and the dollar will likely move.
The EURUSD recently bounced from the 1.16 area last week and 1.17 this week. Both bounces are attributed to the comeback of the U.S. stock market. Despite the fact that the market’s uncertainty about the health of the President of the United States (POTUS) persists, the stock market is unfazed and remains close to all-time highs.
Ahead of the earnings season, the stock market eyes the U.S. election scheduled on November 3rd. Because of that, the chances are that the tight ranges will continue for the month of October,
Therefore, any correlated trade, like one on the EURUSD is, should consider the U.S. election and the relative tight ranges until then. As such, trading on the lower timeframes makes sense from a risk management point of view.
EURUSD Divergence on the Hourly Chart
This week’s EURUSD bounce came on the back of the USD losing ground across the markets. Oil, gold, and other fiat currencies in the developed world gained against the USD.
The EURUSD made a new high, but the RSI on the hourly timeframe does not confirm it. Because of the divergence, bears may want to trade a break of 1.1740 with a stop-loss order at 1.1830 and a take profit at the start of the rising wedge (1.1620).
For more about technical analysis setups, consider our Forex trading course.
Don’t miss a beat! Follow us on Telegram and Twitter.
EURUSD Price Forecast
More content
- Download our latest quarterly market outlook for our longer-term trade ideas.
- Follow Mircea on Twitter.
- Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.