The Euro has rallied significantly during the week, reaching towards the 50 week EMA, which of course is crucial. At this point in time, the 1.12 level should offer significant resistance as it has previously been significant support. Beyond that, it is also the top of the down trending channel, so therefore it makes quite a bit of sense that we have pulled back from a technical analysis standpoint. Ultimately, this is a market that continues to be stuck in a relatively tight range, and even though this last week candlestick has been very bullish, the reality is that the 1.10 level underneath has been extraordinarily supportive.
EURUSD analysis Video 16.12.19
If we can break down below the 1.10 level, then the Euro goes looking towards the 1.09 level, and then eventually the 1.0750 level where there is a significant gap. Beyond that, you could be looking at a move down to the 100% Fibonacci retracement level which is closer to the 1.04 handle, but that’s obviously something that would take a long time to get to. To the upside, if we were to break above the 1.12 handle, then it’s likely that the market goes looking towards the 1.14 handle, and then eventually the 1.15 level. With the ECB being so loose with monetary policy though, it is a bit difficult to imagine that the Euro is going to gain longer-term unless something negative comes across for the US dollar. That being said, US economic numbers as of late have been a bit mixed. We have a clear resistance barrier in the form of 1.12 that we should be paying attention to.
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This article was originally posted on FX Empire
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