EURUSD H4 Chart Analysis, August 23, 2023
Is EURUSD about to rebound to the mean?
As comments from FED members indicate, the American economy remains relatively strong. With inflation remaining sticky, this opens the door to further increases in interest rates. Much will depend on what Chairman Powell will say at the Jackson Hole symposium on Friday.
On the short H4 interval, we are currently drawing a very interesting situation. The price from the local peak at 1.09303 is already falling by more than 1%. For this reason, the exchange rate is already reaching oversold levels on the RSI indicator, touching the lower Bollinger Band simultaneously. This chart determines it by the third (not the usual – second) standard deviation from the median. This highlights the strong momentum of the decline.
As indicated by the vertical blue lines, whenever the price touched the lower limit of the channel, it quickly rebounded to either the median (orange line) or the upper Bollinger Band. When trading a short-term trade, you can expect this to happen again. Assuming that the rate returns to the median (as it was between the last two vertical lines), potential short trade may start from a Fibo retracement of 0.382 (1.087).
EURUSD H4 Chart Analysis, August 23, 2023. Past performance
Fibo retracement and Fibo extension past performance.
Using the Fibo retracement strategy to determine the entry point and the Fibo extension to determine the take-profit location has proven useful in the past. Then, waiting for both the median level (Fibo 0.618) and Fibo 0.382 (marked on the chart) gave measurable results. Copying the strategy, in this case, may bring the exchange rate to around 1.08700, then down to at least 1.07939. This means a movement of about 0.7%.
According to this strategy, stop losses should be placed above Fibo levels. Also, note that volatility may be elevated around Powell’s speech.
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