Bullish Reversal in Euro

05/24/2019 2:35 pm EST

Focus: FOREX

Trevor Smith

Commodity Trading Advisor,

The euro is showing signs of a near-term bullish reversal .

Eurodollar FX futures are showing strong bullish reversal signs and candlesticks for the next few days or longer: Check the three-day, daily and four-hour charts. This price increase off Thursday’s weekly low is supported by volume, momentum and positive divergence indicators:  The Money Flow Index, Chaikin Money Flow, Williams%R, CCI and ADX. This week’ projected highs are still bullish targets.

Some of the volatility data indicate the volatility collapse has already begun for weekly-expiring options. Selling a put spread to collect premium might be less advantageous than going long by buying a call spread. Strike prices could be chosen that are straddling current price, positioned slightly overhead, and/or out-of-the-money up to the target of 1.1126 to 1.1131 with next Friday’s expiration (May 31, 2019).

Because there are shadowy tails on the tops of the candles, I am inclined to assert that one could get a throwback down lower entry than Thursday’s low, Thursday closing price, if sellers remain present who created those top tails. Today may be a good day to place this potential trade.

Do your own research as a wise reader/trader, and check gold charts for a similar Long trade, except it does not have the out-of-value component that I see in the euro futures.

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