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Bulls’ last hope! If it loses this level, the euro will return to the "dark downward channel"
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Hello everyone, todayXM Forex will bring you "[XM Forex Platform]: The last hope of bulls! If it loses this position, the euro will return to the "dark descending channel"." Hope this helps you! The original content is as follows:
The EURUSD exchange rate traded around 1.1520 during the European session on Thursday (November 6). On the recent hourly chart, there was a rapid rise from 1.1468 and an upward test of 1.1523, and then fell slightly, but still stayed above the neckline. Currently, bulls and bears are at the intersection of the slowdown in fundamental growth and the neutral stance of the central bank, and the short-term has entered a key selection area.
Fundamentals
Retail sales in the Eurozone fell by 0.1% month-on-month in September, marking the third consecutive month of month-on-month contraction or stagnation, weaker than market expectations of +0.2%. Looking at the breakdown, fuel sales continued to fall by 1.0%, non-food sales fell by 0.2%, and food, beverages and tobacco were the same. The performance of major economies was divergent: Italy -0.6%, the Netherlands -0.4%, France -0.1%, while Spain +0.4% and Germany +0.2%. Year-on-year growth slowed to 1.0% from 1.6% in August, in line with expectations. The above www.xmserving.combination shows that terminal demand is still moderate, and retail sales are facing a real "shrinking volume", which poses a constraint on the fundamentals of the euro and makes it difficult to provide solid endogenous kinetic energy for a sustained upward trend.
At the policy level, European Central Bank Vice President Guindos said in an online event that he "feels www.xmserving.comfortable" with the current interest rate level, and said that he is "more optimistic" about service industry inflation and that wage trends are consistent with forecasts. He also emphasized that inflation has "fallen back to 2% as the baseline" and that recent concerns about being "below the target" may be temporary, and "there is no discussion of adjusting quantitative tightening." This must be coordinated to take into account the "price recovery is on the way""The balance between "policy remains on the sidelines" means that the threshold for active easing again in the short term is high, and there is no rush to tighten further. As for the exchange rate, the ECB did not provide new hawk or dove shocks, and focused more on data and external financial conditions.
On the U.S. dollar side, the sentiment for the U.S. dollar has improved significantly in recent times, which is not only reflected in the spot exchange rate, but also in the options market : The euro-dollar risk reversal turned negative again, indicating that the market demand for downward hedging of the euro has returned, and the premium for the downward tail risk of the U.S. dollar has fallen. Previously, external uncertainty around the tariff issue once raised the pricing of the U.S. dollar tail risk. After the recent waves have calmed down, the price of hedging has returned to normal, pushing the dollar sentiment to prevail in a phased manner. The gap is still there, but the risk of "potential political interference on monetary policy" has not been www.xmserving.completely cleared, and the US dollar is not unilaterally safe. Overall, the fundamentals are slightly neutral to the euro, and sentiment has a slight upper hand against the US dollar, which drives the exchange rate to rely more on technical levels and momentum interpretation in the short term:
The hourly chart shows that the exchange rate has fallen sharply from the high of 1.1533 to 1. It rebounded after 1472 and fell back to 1.1468 to form the prototype of a "W-shaped reversal". Then it broke through the neckline with heavy volume and reached 1.1523. It is now settling above the neckline; the current price is still above the neckline, and the structural bulls have not yet been destroyed.
Structure and shape: 1.1468-1.1523 constitutes the latest round of "V-shaped reversal + return." "testing a breakthrough", the neckline near the purple horizontal line was once suppressed, and after the breakthrough, it was transformed into a "support level" that turned resistance into support. If the resistance does not fall below, the "W-shaped reversal" is expected to continue.
Momentum and indicators: MACD is above the zero axis, DIFF and DEA rise simultaneously, the histogram maintains positive expansion, and there is no typical "top divergence" yet. RSI (14) is about 63. It is in a "strong range but not overbought", indicating that the momentum is still there but the margins are slowing down.
Key price area: For upward resistance, pay attention to the two adjacent high points of 1.1523 and 1.1533, which are short-term resistance bands; if the volume effectively breaks through and closes above them, a new "Fibonacci expansion" space will be opened upward, and the trend may change from a "rebound" to a "small-level upward trend." ". The lower support focuses on the backtest strength of the neckline area and 1.149, and the deeper support is 1.1472 and 1.1468, which form a "multiple support cluster." If it falls below 1.1468, the current reversal structure will be negated, and the hourly level will return to the "downtrend line" dominance.
Outlook
Short-term (1-3 days): In the range of 1.149-1.1533, the "mutual verification" of technology and sentiment will determine the direction. If the hourly level continues to close above 1.1523 and the volume can break through, the probability of going up to 1.1533 and stabilizing will increase, and the price is expected to enter the initial stage of the "upward channel"; on the contrary, if it falls back below 1.149 and enlarges the negative line entity, the structure will shift to "false breakthrough+"."Retracement", 1.1472 and 1.1468 will be quickly retested, and attention will be paid to whether there are "early dawn" or "hammer line" and other stop-fall patterns.
Midline (1-3 weeks): The baseline scenario is "consolidating the market" Continue. The demand-side recovery in the Eurozone is limited and the ECB's tone is neutral, which makes it difficult to provide continuous fundamental driving force. Although the sentiment on the US dollar side is picking up, it is still constrained by policy and data fluctuations. Therefore, it is difficult to form a unilateral "long market sentiment". Inter-trading and trend trading will alternately dominate, and price magnetism is concentrated between the neckline and double highs. If subsequent high-frequency data in the Eurozone stabilize, and service industry inflation and wages continue to be "in line with forecasts," the euro may receive a moderate "valuation repair." "; On the contrary, if consumption weakens again and triggers a reassessment of growth, the exchange rate falling below 1.1468 will push the structure into a "descending channel."
The above content is about "[XM Foreign Exchange Platform]: The last hope of bulls! If it loses this position, the euro will return to the "dark descending channel". The entire content was carefully www.xmserving.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thank you for your support!
Due to the author's limited ability, time constraints and other reasons, some contents in the article still need to be further discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues:
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