Positive euro-zone economic data bullish for euro
Improving German consumer confidence and French Q3 GDP upgrade are bullish for euro. Will the EURUSD continue the climb?
Recent better than expected euro-zone data are bullish for euro. German GfK consumer confidence index in January and French Q3 GDP were better than anticipated: German consumer confidence edged up to 10.8 from 10.7 in December, and French Q3 GDP final reading was upgraded to 2.3% from 2.2%.
On the daily timeframe EURUSD is retracing after it fell to 6-week low in mid-December. It has breached the resistance line and the 50-day moving average MA(50).
- The Donchian channel indicates uptrend: it is tilted up.
- The MACD indicator is above the signal line and the gap is widening, which is a bullish signal.
- The Parabolic indicator gives a buy signal.
- The stochastic oscillator has breached into the overbought zone, this is a bearish signal.
We believe the bullish momentum will continue after the price breaches the above upper Donchian boundary at 1.1929. A price point above that level can be used as an entry point for a pending order to buy. The stop loss can be placed below the lower Donchian bound at 1.1717. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop-loss level (1.1717) without reaching the order we recommend cancelling the order: the market sustains internal changes which were not taken into account.
Technical Analysis Summary
| Position | Buy |
| Buy stop | Above 1.1929 |
| Stop loss | Below 1.1717 |