 Good morning and welcome to the chart of the week video with me David madden today's date is Thursday the 20th of August 2020 and the time has just gone 952 British summertime and this week's chart of the week is Euro dollar As we can see here the wider trend for the last few weeks and months has been in a solid upper trend It's been quite positive It wasn't too long ago only on Tuesday Euro dollar in its highest level in over two years So it's been on a very much kind of positive upward run But where do we go from here? If you take a look at yesterday's price action this candle here the big red one That has the potential to be a bearish daily a daily bearish engulfing Which if that is the case Could suggest that we could see and move to the downside Now for those of you don't know What a bearish engulfing is let's just take a look at a textbook example This is this is the price pattern here where you have several days in Rome of an upward move all these green candles And then what you have here is a large downward day We could see here The body of this candle here did the big red red rectangle completely engulfs The body of the previous days candle this green body here, which is this is where the engulfing Part comes in and then what we can see is after that The the engulfing itself is that followed by and followed by a negative down day If you look at that the price action in the past, you know a couple of days We have the large We have the large negative body here engulfing the previous days But positive state body, but we could also see that we were also in the red today So it is possible that we could be this this could be a bearish engulfing on a Euro dollar And should that be the case? We could see you know further losses We could potentially head back towards this area in one spot 1781 a move below that could take us down towards this zone here just north of kind of in around the kind of 117 area that the lows of early August are in around one spot 1696 If you have a break below that we could potentially see his head towards the kind of 116 one spot 16 zone That area saw a bit of consolidation In late July and it's only if you really have a very significant Pullback move to the downside Could he head back down towards this blue line here the fifth to the movie average and that comes in the play in at one spot 1511 and notice how in the kind of latter half of May The fifth to the movie average acted both as resistance and also as support and if the metric has been important in the past It makes it more likely it'll be important in the future although there are no guarantees But let's not let's not forget what the wider trend is so the wider trend is very much to the upside So if a broader trend does continue We can if you take out the recent highs that we saw only only a couple of days ago We could then be looking up towards the kind of psychology born to 120 level and if you go beyond that We could also be could be looking heading back up to them this level here in at once this level up here In at one spot 2140 because like I said Only a couple of days ago euro dollar had its highest level since May 2018 so it's highest level in over two years So every does depend on what kind of time frame you're looking at some traders are very much short short You know a short time. Where is it going to be in the next couple of hours? So it is or some traders look where is it going to be in a few days or weeks? So it is possible we could see a this could be this could not to be a bearish engulfing whereby we have We have a pullback and move to the downside But the pens some people might take I've been taking a longer term view And because that let's face it buying on the dip has been a popular strategy the last number of months So if we do the move at the downside that could we could see some fresh buyers enter the fold although some traders would have very much a short term time span could be looking to could could be looking to Could be looking to to to these downside targets as potential areas Actually to close up potential short positions rather than as enter as long positions If you are going to be trading euro dollar, it is worth keeping an eye on what's going on with the dollar index This is the dollar index here. It's been in a very much a negative trend The dollar index is basically the US dollar basically against the basket of other currencies and The euro dollar the euro makes up over half that at some of the region around 55 57% of the dollar index And we talked about what appears to be a bearish engulfing on euro dollar Well, conversely, we seem to be seeing a bullish daily engulfing on The US dollar index and so we're seeing a push higher in the dollar Which could suggest we might see further gains from here If you do put to the upside on on the and the dollar index keep an eye on for this zone here They can at 94 area. It's been area where that which is the dollar index has kind of really struggled to break above But if you do see a break above it That could be quite significant and that could and if you do see a break above 94 on the dollar index That could suggest we could be in for further losses on euro dollar Conversely, if the dollar index fails to break above 94 and holds above that That could be assigned at the kind of wider upper trend a euro dollar is going to continue Now if you are trading euro dollar or any dollar crosses today Please keep in mind that at 1330 British summer time We have US jobs data out we have the all the jobless claims and also the continued claims reading as well That's all from this video. Thank you for listening. Have a good trading week and good luck