• 560 days Will The ECB Continue To Hike Rates?
  • 560 days Forbes: Aramco Remains Largest Company In The Middle East
  • 562 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 962 days Could Crypto Overtake Traditional Investment?
  • 967 days Americans Still Quitting Jobs At Record Pace
  • 969 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 972 days Is The Dollar Too Strong?
  • 972 days Big Tech Disappoints Investors on Earnings Calls
  • 973 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 975 days China Is Quietly Trying To Distance Itself From Russia
  • 975 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 979 days Crypto Investors Won Big In 2021
  • 979 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 980 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 982 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 983 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 986 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 987 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 987 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 989 days Are NFTs About To Take Over Gaming?
Frank Hogelucht

Frank Hogelucht

Individual investor, trading for a living since 2007, taking a statistical approach in combination with historical market data and addicted to developing market-neutral algorithmic trading…

Contact Author

  1. Home
  2. Markets
  3. Other

EUR/USD at 16 Month Low - What Next?

Notable on Thursday's session was the fact that the euro hit a 16 month low against the dollar (EUR/USD), the lowest close since 09/10/2010.

In addition, closing more than 2 standard deviations below its 10 day simple moving average, EUR/USD seems to be short-term ´oversold´. But while other securities may be due for a short term bounce (mean reversion), cautiousness will be warranted with EUR/USD ...

Table I below shows the EUR/USD (cash) performance over the next five sessions and until the end of the then following week (in this event until Friday, January 13) in the event EUR/USD closed at a 6 month low, and at the same time at least 2 standard deviations below its 10 day simple moving average from above the day before.

The EUR/USD closed at a lower level on 4 (or more) out of every 5 occurrences (or 80%+ of the time) 2 sessions later until the end of the then following week, and was never up 1.0%+ 2 and 3 session later, and never up 1.0%+ at the end of the then following week as well, but down (again) another -1.0%+ on 8 occurrences (or 50% of the time). EUR/USD posted at least one lower close until the end of the then following week in all but one instances in the past.

EUR/USD at 6 month low and 2 SD below 10-day moving average
Table I - EUR/USD at 6 month low and 2 SD below 10-day moving average


Conclusion(s)

For the time being, EUR/USD may remain in a downtrend, and assumed ´oversold´ conditions at a x month low have never been a screaming buy, but almost always led to lower prices over the next couple of sessions in the past.

Have a profitable week,

 

Back to homepage

Leave a comment

Leave a comment