The four-hour chart of the euro against the zloty (EURPLN) shows us a clear downtrend. However, momentum has slowed since last week, and there are some indications that price might move up from here. The most important support seems to be the area of 4.247. There is no strong high resistance at present on this timeframe, but the area of 4.30 might be a barrier to upward movement in the further future.
Moving averages are somewhat mixed on this timeframe. The faster MAs (20 from Bands and 50) suggest a buy signal, with price having moved fairly strong above these today. The 20 SMA is ready to golden cross the slower 50-period SMA. However, price remains below the 100 and 200-period moving averages. It’s possible that the 100-period SMA might function as resistance over the next day or so in the area of 4.267. This would probably not be a very strong area, though. The 200 SMA might be more significant as resistance.
Although the slow stochastic (15, 5, 5) is neutral at the time of writing, it seems to support the picture of an incipient upward movement. Price failed yesterday to follow up on a crossover barely within overbought. Bands (20, 0, 2) have contracted somewhat, so the current candle’s fairly big gains probably do not suggest a breakout upward. MACD though has extended to the upside: the histogram is in positive territory while the signal line remains close to zero.
Price action on this timeframe suggests that an upward movement might be favorable. Relatively long tails in two candles this week indicate that price is in an area of demand. The current period could form into an upward engulfing pattern; completion of this candle would provide confirmation.
Fibonacci here is based on the latest downward movement on the daily chart. The 23.6% retracement area seems to be an area of resistance that price is currently testing. A rejection downward here and daily close below 4.26 could lead to a retest of EURPLN’s latest low around 4.267.
Technical analysis of EURPLN H4 suggests a buy signal. However, traders should monitor slow stochastics in combination with Bollinger Bands for the possibility of overbought conditions. Equally, central banks and data points are very important in the rest of the week.
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