euro vs dollar daily and weekly charts

Euro Dollar – Daily and weekly charts with the Hawkeye Fatman

The euro vs dollar is now at an interesting point on both the daily and weekly charts with the pair having traded lower over the last three days, testing the psychological 1.3000 level, which has now been breached in this mornings forex trading session. The question now of course is whether this is a change in the longer term bullish trend, or simply a short term reversal following the surge higher last week following the launch of QE3 by the Federal Reserve, so where do we start?

As always, we begin with the Hawkeye Fatman, which is clearly showing that on the daily timeframe, the green line, the euro, is now moving firmly into the overbought area on the indicator, suggesting that we could see the euro weaken in due course. The question however is whether this is likely to be against the US dollar, or another currency. Whilst the US dollar, the cyan line is moving higher from an oversold region, this is just one of the currencies against which the euro may be sold in due course. Moving to the weekly Hawkeye Fatman indicator, the euro is still rising firmly. with the US dollar falling, suggesting that the current pullback is merely a temporary reversal in an otherwise bullish trend, and indeed there is further evidence of this on the charts themselves.

On the weekly chart, we can see that the Hawkeye Heatmap has recently changed to bright green, reflecting bullish momentum in all three trends, and in addition, this has been supported with firm and sustained buying volume over the last few weeks. The longer term trend on the three week chart has yet to change, but we are already seeing no demand volume here, suggesting the change in sentiment is now being reflected in the longer timeframes. In the last two weeks we have seen the trend changing from bearish to bullish with two green trend dots, and an aggressive Roadkill entry signal confirms this analysis.

Moving to the daily chart for the euro dollar, the current bullish trend remains firmly in place, supported with strong buying volume, a bright green Hawkeye Heatmap, and solid green trend dots. The pullback in the market has been clearly signaled on the daily chart with the yellow pivot, defining the isolated pivot high on the chart, and signaling a pullback of three, five or seven bars which we are now seeing as the market pauses at this level.

So in summary we can expect to see some further short term weakness for the euro dollar, before the pair continue higher in due course over the longer term, and pick up the bullish trend once again, to test the 1.3500 region in due course.

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