Analysis by forexhome.de
A packed economic calendar and the prospect of plenty volatility! What do I expect in EURUSD ahead of Draghi, ECB and Fed? Of course, I can´t do my analysis without looking at the daily and weekly charts, but I think there´re some interesting ways to participate in the expected price fluctuations, especially in the H4 chart. The thought of another downturn remains, and in my opinion there´re enough reasons. It’s time to be very careful and not to get carried away emotionally by the dynamics.
EURUSD ahead of Draghi, ECB etc
In particular, in a Currency pair that is influenced by the most important central banks of the developed industrial nations, I can no longer imagine a forecast without looking at the strongly superordinate monthly chart. Apart from many short-term trades, I think long-term investments are very important.
In this context, the bearish prospects in the EURUSD seem particularly interesting to me. On the basis of the large supposed range between March 2008 and February 2009, I was able to determine a price target for me, which at around 0.91260 reflects the last overcome resistance before the big rally since 2002 – this should be a test. In addition, I have determined a second possible price target, which has its origin in the large triangle formation. The 189 Fibonacci Expansion Level also plays a major role.
Does that mean that I’m just looking south? Not at all. I have defined the outbreaks and price targets, but there´re still retests to do. For example there´s the bottom of the range described at around 1.26750, which should also represent a test of the 61.8th Fibonacci retracement of the last major descent. However, I doubt that this point is already over, because the former breakout level of the upward flag at approximately 1.35645 may also be waiting for its test, after the target price determined in March 2015 was reached.
In connection with the 89 Fibonacci retracement and the formerly overcome (but not held) resistance at approx. 1.35860, a controversial barrier can most likely be noted. It´s equally suitable as a starting point of the great descent as well as the course targeting of any long setups. With the two highs from August and September of this year, the price target of the first small range was apparently reached, while the second, slightly larger range should lead me towards the 61.8 retracement. But even with these two sideways phases I could not determine a retest – this is the reason why the risk of correction remains omnipresent. That’s why I´ll not bite into a course direction.
EURUSD news: Actionism is out of place
During an ECB Fed Draghi-Yellen FOMC week, you run the risk of getting bogged down. Many nice fast price movements, a lot of opportunities and it would be a sacrilege not to get involved. I see it very differently, and that’s why my assessment of the weekly chart follows. Then I work my way forward.
I can set two points that delivered important momentum in the EURUSD rally. On the one hand the retest of the eruption under the big range in February, and the breakout on the horizontal resistance at around 1.07800, as well as the 61.8er Fibonacci Expansion Level in April of this year. In the context of the last-mentioned outbreak, I still can´t find a retest. As luck shows it, just below is the 89th Fibonacci retracement of the entire rally, a gap close range and the potential retest range from the monthly chart. Overall, the individual retracements fit very well into the overall picture.
Added to this is the current weakness or failure at the 289 / 300.0 expansion level. The current chaos around the 23.6 retracement respectively about 1.17600 does not seem to be a coincidence, because the secondary price target of the former range is here. The previous year’s high will most likely play a major role once again, as the top of a week-based range, as a high for the year itself, or as an 89 retracement of the last small descent. Also in the daily chart I´ll see this level again soon. After the 50 retracement and the 61.8 retracement could not be overcome, I expect a correction that could easily be traded in the daily and above all in the H4 chart.
EURUSD Analysis Daily Chart: The circle
In the daily chart, I remain with my assessment that the price is currently in charttechnical no man’s land. Particularly important to me is a test of the upper limit at around 1.19773 and 1.20345, and around 1.20650.
Here you can combine the 89 retracement, the described first target price from the monthly chart, the previous year high and a gap close range. If the bulls fail at this point, my opinion is: In the context of what I believe a sustainable bearish break from the daily range is an extremely attractive positioning opportunity, and a medium to long-term short exposure. The positive short swap would round off the setup.
My current Engagements
With my forex signal service recently a long position was placed, with a target of a top daily range. This may be ambitious at the moment, but you can be sure. In particular, the aforementioned failure on the weekly and daily Fibo retracements as well as the recent bearish outbreaks in the H4 chart could lead to further corrections. More information about Forex Signal Service here.
Two price areas are moving into focus. On the one hand, the bottom of the last abandoned supposed range at about 1.18460, which corresponds to a former resistance in the daily chart and the 55 retracement of the last descent. Second, there´s the 61.8 retracement, which can be combined with the last broken support that hasn´t yet been tested. T