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Morning Market Squeeze - 07/29/2020 - The euro has seen its best rate of ascent

Financial instruments have their own unique fingerprint, as they react differently to certain moving averages. The exponential 50-day moving average (EMA) is a popular average used by traders, and the EURUSD pair happens to adhere pretty well to it.


More importantly, though, and more to the point of today's study, is the fact that a qualitative review of this key currency pair's 5x the average true range (ATR) displacement from the 50-DEMA tends to be an area where rallies start to show significant deceleration.


The euro has rallied 5.25% vs. the dollar in just a little over a month. Needless to say, this is an outsized gain in such a short period. After testing how EURUSD performed after matching the criteria of Tuesday's session, however, forward returns begin to slow rather meaningfully.


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