- EUR/USD charted a bullish inside day on Monday, aborting the immediate negative setup.
- Reversal higher coincides with risk rally on Fed bond-buying announcement.
EUR/USD is flashing green at press time, having charted a bullish reversal candlestick pattern on Monday,
The pair is currently trading near 1.1340, representing a 0.12% gains on the day. The single currency rallied by 0.6% on Monday, but traded well within Friday’s trading range, forming an inside day candlestick pattern.
The green inside day candle suggests that the pullback from the June 10 highs above 1.1422 has ended and the bulls have regained control.
The bullish picture looks stronger if we take into account the fact that Monday’s candle has little or no upper and lower wicks, meaning the bulls dominated the proceeding from the opening bell to the closing bell. Essentially, Monday’s candle has taken the shape of a bullish marubozu, which indicates strong positive sentiment and often proceeds notable price rallies.
All in all, Monday’s inside day bullish marubozu candle has opened the doors for a re-test of the recent high of 1.1422. A violation there would expose the 2020 high of 1.1495 reached on March 9.
The bias would turn bearish if the pair ends Tuesday below Monday’s low of 1.1212. However, that looks unlikely as the Federal Reserve’s decision to start purchasing corporate bonds through the secondary market corporate credit facility has restored the risk sentiment in the global equity markets. The futures on the S&P 500 are currently up nearly 0.70%. The US dollar, therefore, could remain on the defensive on Tuesday.
Daily chart
Trend: Bullish
Technical levels
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