The MACD confirms a trend change on the EUR/USD

on Apr 15, 2015
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Since last week we have been analyzing the MACD on the EUR/USD daily chart for a possible confirmation of a bearish change in direction of the trend. Let’s keep in mind that the MACD is a trend indicator, which shows us the direction of the trend and the strength of the trend.

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On the Daily chart of the EUR/USD, courtesy of the Forex Broker ActivTrades http://www.activtrades.co.uk/, we can see at the bottom of the chart the MACD indicator, which is compose of some green bars, called the histogram, a blue line which is the MACD itself and a red dotted-line which is its signal line. The bars on the histogram shows us the strength of the trend and we noticed since last week that those bars were starting to get smaller, indicating weakness on the trend and a possible trend reversal. This week the trend change was confirmed by the cross to the downside of the MACD line (blue line) below its signal line (the red dotted-line).

There could be a continuation to the downside, as long as the histogram bars continue expanding, but we must also be aware that the price is closing in on the 1.0500 level, which could act as a good support for the pair. Actually, we cannot say for sure that the EUR/USD has gone back to its longer term downtrend until the price makes a lower low below its 12 year low around the 1.0457 level.

Alexander Londono – Analyst contributor at ActivTrades.

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