EUR/USD Consolidates as it Prepares to Progress Higher

EUR/USD Forecast Video for 16.01.23 by Bruce Powers

Following a robust advance on Thursday, that triggered a bullish trend continuation signal, the EUR/USD traded largely within the day’s range Friday. Earlier in the session the pair made a minor attempt to go higher as it broke out above Thursday’s 1.0867 high before quickly running into resistance. Subsequently, a 61.8% Fibonacci retracement completed at the day’s low of 1.0780, which also happens to be at the 34-period EMA on the 2-Hour chart. So far, this is bullish price action as a minor correction is normal following a strong advance as seen Thursday.

2-Hour Chart Provides Some Detail

You can see on the 2-Hour chart how the EUR/USD has the potential to move higher within a parallel channel that is smaller than seen on the daily chart. If the trend continues higher the pair next targets the 1.0893 price area where there is the confluence of a couple Fibonacci levels.

On the downside, Friday’s low should hold as support. If it does not, then watch for support above the daily low of 1.0727. A break below there could see the EUR/USD fall to the bottom of the trend channel.

Maintains Bullish Posture

So far it is looking like the pair is going to close relatively stronger than it might given earlier weakness. A bullish breakout occurs above the trend high of 1.0871. Certainly, at some point the EUR/USD could reach the top of the daily channel. The first target zone is mentioned above at the 1.0893 price area is followed by another Fibonacci confluence zone around the 50% retracement of the downtrend at 1.0942.

Overall, the EUR/USD retains its bullish posture if it stays within the borders of the rising trend channel and continues to progress in a series of higher swing lows and higher swing highs. Short-term weakness can be used to build a position or watch for key bullish reversal patterns to trigger new buy entries.

Something to Keep an Eye On

It is also possible that the pair sees an acceleration to the upside. Although there are no signs of that yet, markets have a tendency to repeat prior swings. As the uptrend progressed higher off the September low it accelerated around the beginning of November achieving a 7.7% move in only eight days. The current advance has the potential to match that move. Something to keep an eye on.

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