The EURUSD made indecisive movement this week, formed a Doji on weekly chart. The pair has been moving significantly bullish in the last three weeks, made new higher highs and higher lows, but as you can see on my weekly chart below, the body size of the weekly candles are getting smaller indicating that the bullish momentum actually getting weaker each week.
I have been watching the CCI divergence on daily chart as a potential technical signal for a bearish reversal since last week. But the growing optimism about the world recovery progress keep the Greenback under pressure so it will be uncomfortable for me to buy the Dollar in the last three weeks. From fundamental point of view, the CCI divergence bearish reversal scenario will get some support if in upcoming weeks the market begin to wane their optimistic view. The focus now is on government stimulus exit strategy. Some investors might not be too confidence if the governments decide to end their support to the market too early. Well, this situation can be very tricky for us.
So, will CCI divergence on technical side lead us into a bearish reversal? That is not an easy question to answer. I prefer to wait and see how the market react to the newest development. Yesterday, I said that the EURUSD is now testing the 1.4595 key support area. On h4 chart below we can see that that support area still hold so far, and the trendline support, former resistance (red) still did a good job preventing further bearish pressure and keep the bullish view intact. In upcoming week, this support area is still the key level to watch. A break below that area could trigger potential further bearish momentum and if, from the fundamental view, the market begin to wane their optimistic outlook and Stocks and commodities retreat lower, the bearish reversal scenario will be at least targeting 1.4440 or even 1.4190 area. On the upside, I will pay attention to 1.4850 resistance area. Break above that area should trigger further bullish momentum targeting 1.5000.
Have a great weekend and see you guys next week!