Several major economic releases come out throughout this week. For the United States, the key figures to look out for is Wednesday’s inflation figures and FOMC meeting minutes where we will gain a better indication of rate hike expectations.
Current focus is the EURUSD pair, observing a daily divergence.
Over on the daily time-frame, we see a divergence utilizing the relative strength indicator. Prices made a hump of a higher high, but our RSI essentially tracking the gains ratio is already declining. In other words, we would be see greater average price down movements. Since EURUSD remains in a strong up-trend, it is more or less suicidal to consider this a “top”.
Beginning with the weekly time-frame, it appears more or less to be in the middle of a range. It crossed above another daily level marked at the 1.1145~ price level. The next major point of resistance is the weekly level at the 1.147~ price level. Once it reaches the weekly level, we could consider it as a higher probability weekly down-trend.
Over on the daily chart, we see a rather weak test of the support turned resistance and now turned support level. More specifically, it was a rather weak cross above that 1.1141 level. First we see a bearish bar before a bullish bar breaking through. After the bullish bar broke through, price crossed below the level before managing to close higher. At this point, we should consider the selling pressure despite managing to close higher.
Right now, we see a test on the support turned resistance zone. This is actually a second test especially now that this week’s session gapped up, but has yet to break above our hourly zone. By the looks of it, bullish pressure is still expected to remain lackluster and I would look to short this pair deeper into the zone.