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EUR/USD Trades Above 1.1200 on Positive PPI Data

EUR/USD Trades Above 1.1200 on Positive PPI Data

Walker England, Forex Trading Instructor


Talking Points

The EUR/USD has broken over the critical 1.1200 resistance level after a series of positive Eurozone news releases this morning. PPI (Producer Price Index) figures were expected at 0.4%, but were released at an actual 0.7% (MoM)(JUN). The next point of daily resistance is found near 1.1286, and is found at a daily descending trendline. This line has been created by connecting series of lower highs beginning with the May 3rd high at 1.1616. If prices break above this line, it suggests an end to the EUR/USD current daily downtrend. However if prices are rejected here, it opens up the EUR/USD to trade back towards daily lows.

Losing money Trading? This may be why.

EUR/USD, Daily Chart

Chart prepared by Walker England

In the 5 minute graph below, we can see the EUR/USD trading up to its daily high at 1.1226. The Grid Sight Index (GSI) has indicated that short term momentum is also pointing higher by highlighting a series of higher highs in the last hour of trading. After reviewing 70,644,745 pricing points, GSI has indicated that price have advanced by 12 pips or more in just 32% of the identified 95 historical matches. This places today’s first bullish distribution at a price of 1.1236. A move through this value would be imperative for the EUR/USD to gain the momentum it needs to challenge daily resistance previously identified at 1.1283.

Alternatively, it should be noted that the first bearish historical distribution is found at 1.1212. GSI has indicated that prices have declined 12 pips in 45% of the matching 95 historical events. A move through this value would open up the EUR/USD to a broader retracement for the remainder of the session. In this instance traders should watch the EUR/SUD for a close back below 1.1200. A move below 1.1200 would suggest a return to bearish market conditions, and an end to this morning’s bullish momentum.

Want to learn more about GSI? Get started learning about the Index HERE.

EUR/USD 5 Minute GSI Chart

Are traders long or short the market? Find out here !

Sentiment for the EUR/USD is nearly at an extreme with SSI reading at -1.92. With 66% of positioning short, this suggests that the EUR/USD may continue to trade higher. In the event of a bullish breakout, traders should look for SSI to move to a negative extreme of -2.00 or greater. Alternatively if prices breakout lower, it would be expected to see SSI reading move back towards a more neutral value or potentially flip positive.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.