EUR/USD Forex Weekly Technical Analysis – Bullish Over 1.1886, Bearish Under 1.1709

The Euro closed higher against the U.S. Dollar last week. A sharp rise in German bond yields helped underpin the single currency. Early in the week, the Euro was supported as investors took a cautious view over how much U.S. tax reforms would boost the U.S. economy. However, some of the move was likely exaggerated due to the upcoming Christmas and New Year’s holidays. The Euro hit its high for the week after the U.S. House and Senate passed the biggest tax overhaul bill in 30 years.

For the week, the EUR/USD settled at 1.1859, up 0.0110 or +0.94%.

Weekly Swing Chart Analysis

The main trend is down according to the weekly swing chart. A trade through 1.1961 will change the main trend to up. This could trigger a rally into the next main top at 1.2092.

A trade through 1.1553 will negate the closing price reversal bottom and signal a resumption of the downtrend. This could lead to an even further decline.

Last week’s price action helped form a new minor bottom at 1.1717.

For the last six weeks, the EUR/USD price action has been controlled by a retracement zone at 1.1823 to 1.1886.

Another retracement zone at 1.1757 to 1.1709 has been providing support.

The major upside target and potential resistance level is 1.2166. On the downside, the major support area is 1.1330 to 1.1151.

Weekly Swing Chart Forecast

Based on last week’s close at 1.1859 and price action, the direction of the EUR/USD this week is likely to be determined by trader reaction to the Fibonacci level at 1.1886.

Overtaking and sustaining a move over 1.1886 will indicate the presence of buyers. This could create enough upside momentum to challenge the main top at 1.1961. Taking out this level could lead to an eventual test of the main top at 1.2092 and the major 50% level at 1.2166.

A sustained move under 1.1886 will signal the presence of sellers. This could lead to a labored break because of potential support levels at 1.1823, 1.1757 and 1.1709.

Look for an acceleration to the downside on a sustained move under 1.1709 with the next target 1.1553.

Volume is likely to be extremely low this week due to the holidays and the absence of the major players like institutions and banks. Therefore, be careful buying strength or selling weakness. You don’t want to get caught in a bull or bear trap.