EURUSD HODL

Last week, the EUR/USD experienced a predominantly bullish market flow. At the beginning of the week, there was an initial push upwards towards the 50-day Exponential Moving Average (EMA) on Tuesday. However, this move was quickly rejected, and the price returned below the weekly open, establishing a weekly low on Wednesday, which also broke below the low of the previous week. The price then staged a rapid rally in an attempt to break above the 50-day EMA.

On Thursday, the price once again encountered resistance at the 50-day EMA but failed to engulf the previous bullish push. Finally, on Friday, the price managed to break above the 50-day EMA and rallied all the way to the 200-day EMA, only to be rejected from this level. This bullish push on Friday resulted in the creation of a fair value gap (FVG). It's worth noting that this week marked the beginning of a new monthly candle, and we observed a bullish candle that closed above the previous month's close.

Currently, some technical indicators suggest caution. Both the 4-hour and 1-hour charts show overbought conditions, as indicated by the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD). Given these overbought conditions, it may not be advisable to initiate long positions at this point. Instead, it's reasonable to expect a retracement back to the level of the FVG created on Friday.

Looking ahead to the coming week, we can anticipate that the price will maintain its bullish momentum unless it drops back below the 50-day EMA. If RSI and MACD remain overbought, it may be a good idea to consider selling the EUR/USD down to the FVG imbalance and start looking for buy signals in price action. However, there's a possibility that the low of the previous week may be taken out if the 50-day EMA fails to provide adequate support.

Looking at the premium/discount array, it appears that the price may be inclined to fill the lowest imbalance, which is situated below the equilibrium and within the Optimal Trading Entry (OTE) zone. Unfortunately, if the price descends to this level during the upcoming week without surpassing last week's high, it could potentially erase all the previously established bullish momentum

The 1-day chart offers a more neutral perspective, with RSI sloping upwards and a reading of 67.56. The MACD is just starting to cross the midline with growing green bars. This suggests that Friday's move could have been an upthrust, potentially aimed at sweeping buyside liquidity. To confirm this, we would need to see the price returning below the 50-day EMA.

In my 1-hour chart, I've indicated various Exponential Moving Averages: the 10-day EMA in red, the 20-day EMA in blue, the 50-day EMA in green, and the 200-day EMA in pink. These EMAs play a significant role in my technical analysis and can provide valuable insights into potential support and resistance levels.

In summary, the EUR/USD is experiencing a mix of bullish and bearish signals, and traders should exercise caution, particularly in light of the overbought conditions. The 50-day EMA and the FVG imbalance will be important levels to watch in the coming week.