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EUR/USD Forex Technical Analysis – Favorable Trade Talks Outcome Will Trigger Reversal to Upside

By:
James Hyerczyk
Updated: Dec 1, 2018, 00:10 UTC

The Euro settled sharply lower on Friday in reaction to safe-haven buying into the U.S. Dollar ahead of this week-end’s crucial meeting between U.S.

EUR/USD

The Euro settled sharply lower on Friday in reaction to safe-haven buying into the U.S. Dollar ahead of this week-end’s crucial meeting between U.S. President Trump and China’s President Xi Jinping. Investors decided to hedge their risks going into the meeting by buying the dollar because the outcome of the meeting could determine whether trade tensions between the world’s two largest economies escalate further.  If the meeting ends without a truce then look for further downside pressure on the Euro. A favorable outcome is likely to be supportive for the Euro.

On Friday, the EUR/USD settled at 1.1321, down 0.0073 or -0.65%.

EURUSD
Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend will change to up on a move through 1.1474. This could trigger a further rally into the next main top at 1.1501. A trade through 1.1267 will change the main trend to down with the next target the main bottom at 1.1216.

The EUR/USD is currently trading inside a major retracement zone at 1.1447 to 1.1185. This zone is controlling the longer-term direction of the Forex pair.

The main range is 1.1216 to 1.1474. The EUR/USD settled inside its retracement zone at 1.1345 to 1.1315.

The minor trend is down. A trade through 1.1403 will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is 1.1474 to 1.1267. Its retracement zone at 1.1370 to 1.1395 is resistance. It stopped rallies three times last week.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at 1.1321, the direction of the EUR/USD on Monday is likely to be determined by trader reaction to the main Fibonacci level at 1.1315.

Bullish Scenario

If the outcome of the trade talks is bullish then look for a sustained rally over 1.1315. This could potentially trigger a rally into a series of retracement levels at 1.1345, 1.1370 and 1.1395. The EUR/USD will strengthen over 1.1403 with the first target a major 50% level at 1.1447.

Bearish Scenario

If the outcome of the trade talks is bearish then look for a drive through 1.1315. This will signal the presence of sellers. If this creates enough downside momentum then look for the selling to extend into the main bottom at 1.1267. This is a potential trigger point for an acceleration to the downside with the next target 1.1216, followed by 1.1185.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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