Another trading week has ended in the Forex currency market, during which the US dollar showed mixed dynamics concerning its main competitors. However, except for the Australian and New Zealand dollars, the "American" declined against all other allied currencies. In particular, the main currency pair EUR/USD showed an increase of 0.34%. However, we must admit that the technical picture for the euro/dollar is far from unambiguous. However, we will talk about this in more detail in the technical part of the review. For now, we will recall the main event of trading on May 17-21, which was the publication of the minutes of the last April meeting of the US Federal Reserve Open Market Committee. The main focus of the FOMC minutes was on increasing inflationary pressures in the United States, and some Federal Reserve officials did not rule out the possibility of reducing the volume of the quantitative easing (QE) program.
Nevertheless, most monetary officials of the Fed consider the sharp increase in inflation as a temporary factor, and market participants have not heard a clear signal about the reduction in purchases of treasury and mortgage bonds. So far, their volume will remain at $ 120 billion per month. Still, it should be noted that in the old days, statements or hints from some FOMC members about the likelihood of a reduction in the volume of the QE program would most likely have led to a larger strengthening of the US dollar than what we saw after the publication of the minutes. In continuation of the topic, it is necessary to emphasize again that the US currency is trading quite unevenly, at least in pairs with the euro. And then it's time to turn your attention to the weekly chart of the EUR/USD currency pair.
Weekly
Despite the growth shown at the auction of the last five days, questions remain about the further direction of the course. Let's figure it out. First, the last bullish candle has a fairly decent upper shadow, which indicates the difficulty of the players to increase with the further promotion of the quote in the north direction. Secondly, there was a false breakdown of two important resistance levels at once (1.2181 and 1.2242). In addition to the long upper shadow already indicated, this is indicated by the closing price of trading on May 17-21, which was at the level of 1.2179. Another rather weighty argument about the difficulties of the market in choosing the next direction is the lower shadow of the previous bearish candle. Thus, the market can not or does not dare to go in either direction and, taking into account the highs and lows of the last two candles, the pair has chosen the trading range of 1.2051-1.2244. It can be assumed that the exit from the designated range will determine the further direction of the quote. At least, this variant of the subsequent price direction can be judged by the weekly timeframe. In my personal opinion, I would give more chances to the ascending scenario. The rationale for this assumption is the already made corrective pullback to the level of 38.2 fibo from the growth of 1.0636-1.2349, as well as the consolidation of the course above the most important psychological level of 1.2000 and the presence of strong support in the area of 1.2030-1.2000, where the pink resistance line drawn at points 1.2349-1.2242, and the blue line of the Kijun Ichimoku indicator, which is located at 1.2026, passes above the indicated round level. For the author's assumption about the implementation of the upward scenario to be confirmed, it is necessary to close the starting week above the previous highs at 1.2244.
Daily
On the daily chart, starting from May 18, the pair began to draw the so-called "fence", which implies the alternate formation (or alternation) of bullish and bearish candlesticks. It is characteristic that all this happens not far from the current highs of 1.2244. At the same time, the price cuts the resistance level of 1.2181, which so far, with all the desire, can not be called broken. I fully assume that we are seeing consolidation before a strong price movement. If we take into account the current trend, it is more likely that the pair will shoot up and confidently break through the resistance of sellers at 1.2244. The first bell for the implementation of the bearish scenario will be the breakdown of the red Tenkan line (1.2148) with consolidation under it.
Trading recommendations for EUR/USD:
Given the far from an unambiguous picture on the two timeframes considered, I believe that in the current situation, you can count not only on successful purchases but also on profitable sales. However, since the pair is trading in an upward trend, it is better to open positions according to the current trend. I suggest looking for options for opening long positions after short-term declines in the price zone of 1.2170-1.2135. Confirmation for opening purchases will be the characteristic candlestick patterns in the selected zone. Since the pair has obvious problems with fixing above the important mark of 1.2200 and breaking through the resistance in the area of 1.2242/44, then options for selling suggest themselves when the reversal patterns of candle analysis appear in the price area 1.2200-1.2240. At the same time, it is better to track confirmation signals at lower time intervals, which will be discussed in more detail in tomorrow's article on EUR/USD.
