The Euro initially fell during the course of the week but has seen such an explosive move on Friday that we turned around to form a bit of a hammer. Quite frankly, this is a market that is oversold so this should not be a huge surprise. When you look at this chart, you can see that we had collapsed once we break down below the 1.15 handle, so it does make a certain amount of sense that we would see a bounce eventually. This candlestick does suggest that we are about to get that, and therefore I believe that we may make a run towards 1.14 handle, possibly even the 1.15 level.
EUR/USD Video 29.11.21
Whether or not we can change the overall trend is a completely different question, but right now it certainly looks as if we are getting so overstretched that this is probably necessary. After all, imagine being short of this market from 1.16, you certainly would want to be taking profits sooner or later. Furthermore, markets do not go in one direction forever anyway, so I think a lot of traders are probably heading into the weekend trying to collect those profits.
That being said, if we were to break down below the candlestick for the week, that could send this market plunging, perhaps reaching towards 1.10 level which I do think gets tested eventually. That being said, we had gone too far too quickly, so this all makes sense in the short term. December is volatile, and I do not see this December being any different. Strap on your crash helmet, this could be interesting.
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