EUR/USD Showing Feint Signs of Exhaustion

Unfortunately for EUR/USD bulls signs of exhaustion are creeping in.

According to analysts at Commerzbank, one of Thomas Demark’s indicators - TD Perfected - is blinking warning signs that the short-term uptrend may have run its course.

TD Perfected signal’s exhaustion but it is not the most reliable.

“Note that a (TD Perfected) setup does not guarantee a reaction in the opposite direction… for instance, if momentum is too strong in the trend direction, a reaction may be muted. A sideways move or continuation of the trend following a setup indicates a weaker setup,” remarks market analyst at ‘See It Market’ Andrew Nyquist.

Apart from the Demark signal we have an otherwise bullish short-term trend which keeps going higher and is therefore forecast to extend yet further.

“The pair has had a strong recovery move in the past few weeks and despite yesterday’s bear candle, there is still a positive trend in place which should continue to guide the price higher.

“The configuration on the momentum indicators has been positive with the RSI tracking the trend higher and the MACD lines now rising in positive territory.

“Corrective moves continue to be seen as a chance to buy, with support today around the breakout at $1.0670, although the trend higher is still intact around $1.0640 today, so there is still room for a further slip but still to retain a positive outlook,” commented Hantec’s market analyst Richard Perry.

Indeed neither the price action or momentum on the four-hour chart is necessarily indicating exhaustion or an overbought state and so we too retain a bullish outlook.

If the market can push above the current 1.0774 highs it will probably continue up to the next round of resistance at 1.0810, although this leaves little room for gain.

A further break above 1.0850, however, would signal a continuation to the key psychological level at 1.1000.