EUR/USD Breaks Out to New Trend High but Can it Keep Going?

EUR/USD Forecast Video for 12.01.23 by Bruce Powers

EUR/USD breaks out of narrow range inside day, then pulls back into Tuesday’s narrow range. It is not clear yet whether the EUR/USD will keep going on this breakout or pull back more first. Keep in mind that upward momentum coming off the bottom three days ago was strong. We are close to completing day four of the swing off that bottom. The question now is, will the pair have enough underlying demand to propel it higher before a minor correction? It is possible that it needs to back up a bit more to build energy for a continuation to new highs.

Bearish Scenario

First, let’s consider the bearish scenario. A drop below the low of the day at 1.0725, will increase the chance for further weakness. Weakness is again signaled on a decline below the inside day from Tuesday at 1.0712. Also, keep an eye on potential Fibonacci retracement support levels shown on the 4-hour chart below. Notice how the 200-period EMA (blue) and the uptrend line converge around the same price zone. The 200-period line on the 4-hour chart is now at 1.0448. That is the furthest we would want to see a correction before the EUR/USD starts taking on a more bearish tone.

The Bullish View

On the bullish side, at this point an advance above Wednesday’s high of 1.0776 triggers a trend continuation. Then, we need to see price keep going. Even then the EUR/USD could pull back into recent consolidation if momentum cannot be sustained in the near-term.

Following an upside breakout, the EUR/USD next heads to the 127.2% Fibonacci extension of the most recent decline at 1.0805. Higher still, is the 161.8% Fibonacci level at 1.0893.

Upside Targets

This daily chart above gives a wider view. Here it can be seen that the EUR/USD is progressing higher in a parallel channel. The orange 34-Day EMA is at 1.0549. It lines up with the 200-line on the 4-hour chart mentioned above, thereby giving that price area more significance if it is reached.

Given that the EUR/USD continues to progress in a clear uptrend weakness can be watched for signals to enter or accumulate when building a position in anticipation of a bullish continuation.

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