Weak German economic data bearish for euro
Weaker than expected German industrial production is bearish for euro. Will the EURUSD continue the decline?
Recent worse than expected German data are bearish for the single currency. German industrial output in October was lower than anticipated: industrial production declined by 1.4%, instead of an expected 1% increase, according to German economics ministry. The decline was recorded across sectors, with manufacturing output down 2.0% and construction output falling 1.3%.
On the daily timeframe EURUSD is retracing after it hit 10-week high two weeks ago. It has breached the support line and the 50-day moving average MA(50).
- The Donchian channel indicates downtrend : it is tilted lower.
- The MACD indicator is above the signal line and the gap is narrowing, which is a bearish signal.
- The Parabolic indicator gives a sell signal.
- The stochastic oscillator has breached into the oversold zone, this is a bullish signal.
We believe the bearish momentum will continue after the price breaches below the lower Donchian boundary at 1.1760. A price point below that level can be used as an entry point for a pending order to Sell. The stop loss can be placed above the upper Donchian bound at 1.1960. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop-loss level (1.1960) without reaching the order we recommend cancelling the order: the market sustains internal changes which were not taken into account.
Technical Analysis Summary
| Position | Sell |
| Sell stop | Below 1.1760 |
| Stop loss | Above 1.1960 |