EURUSD: deep technical analysis and medium-term forecast


I often make long-term forecasts for currency pairs but it’s been a long time since I analysed the euro. I’m going to correct it in this analysis.

https://www.tradingview.com/x/ZWLHq487/

Because EURUSD mostly trades in price channels on large time frames, analysing trading channels first would be wise. I’ve marked the channels of the monthly time frame in ascending order based on their lifespan in the chart above. The first order channel is the oldest. It’s based on the historical extremums at 0.823 and 1.605. These levels are the strongest and they are marked with the strongest resistance and support for market participants. The 5 order channel is the youngest and shows a clear negative incline. The channels 2, 3 and 4 have the same incline. This simple analysis highlights the main trading levels and lets us conclude that the market is bearish. There’s no real bullish channel on the 1-month time frame. 

https://www.tradingview.com/x/MYeskghd/

The last one was broken by March’s failure (marked with the blue circle). This weak level is being tested and its critical value is exactly at 1.08.

https://www.tradingview.com/x/gdWDNdwY/

The chart above shows the same 1-month time frame, with emphasis placed on the current situation. A very important level is marked here – the closure at 1.0517 in 2016 (see the red line). This level is located exactly at the third support level of the Pivot indicator built according to the Fibonacci ratios. At the same time, this level is in the middle of the tolerance zone of the candlestick annual projection (pink triangle). Before entering the tolerance zone, EURUSD soared to almost the maximum of the projection in March (the upper edge of the grey rectangle). So, we can say there’s bullish sentiment in a candlestick forming on the 12-month time frame (candlestick of 2020). That’s why exit and consolidation below the level of 1.026 are very unlikely.  Still, this picture suggests a prospect of testing the level of 1.0517 this year.

https://www.tradingview.com/x/2GtBXFL7/

On the daily time frame, we see the following picture:  EURUSD is consolidating and forming an equilateral triangle. The frontal volume indicator shows that the main trading volume is in the range of 1.09 – 1.077. The horizontal volume indicator points to buyers’ strong positions below 1.08. The ticker hasn’t consolidated below this value yet, which means this is an active support level, even if many breakouts have weakened it. The price is currently located below the equilibrium value of the Pivot indicator which suggests a fall too.

 

Actual scenario

Based on the analysis above, falling below the key level of 1.08 won’t be easy. Most likely, consolidation will continue within the range of 1.09 – 1.08 until the end of May 2020. 

https://www.tradingview.com/x/cluB0LFz/

Let’s get back to the 1-month time frame and have a closer look at the candlesticks of the past 4 months. Each of them has long shadows below which approached the middle of the range at the very least, or even took most of the candlestick’s space. May’s last candlestick is far from closing and it has some time left for offsetting the fall and repeating the movement fractal of its predecessors.  The middle of May’s trading range is located exactly near 1.09.

However, the triangle is still more likely to be broken from above on the daily time frame. This probability is even higher in June (see the previous chart).  If this scenario is true, the nearest support levels will be at 1.07-1.06. When it comes to medium-term trades, the perfect position will be selling from 1.09 with intermediate targets at 1.08 / 1.07 / 1.06. Fix profits when the support level at 1.0517 gets closer. Fix losses when the triangle is broken out from below. The most actual level will be at around 1.095 then.

That’s all for now.  Subscribe and keep in touch!

I’d like to remind you that all materials are provided for educational purposes only. They aren’t financial advice and don’t guarantee any profits. All trading decisions you make are your responsibility only.

Take care of yourself and your money!

Yours,

Michael @Hypov

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