Weekly Forecast and Technical Analysis of EURUSD – 13 to 17 August

The Turkish high inflation crisis pushed the EUR/USD currency pair to the years lowest price of 1.13872 on the last trading day of the last week. The overall market situation forecasts further fallout of the currency pair in the upcoming weeks. Let’s have an outlook and technical analysis of EUR/USD.

Daily Chart Outlook: After reaching the 1.15091 in May-2018, price started to ranging by staying inside a descending triangle pattern where we see continuous lower highs but no lower lows. And then after three month of the years lowest price 1.15091, the latest Turkish crisis helped the pair finally to get out of the triangle and fall down to make the years new lowest price of 1.13972.

The breakout was very clear where we can see a bearish candle completely broke the bottom line of the descending triangle, and even the candle got closed by staying below that triangular range bound pattern, which states that this is a clear breakout of the triangle and not a fake breakout in any means.

EURUSD Daily Chart - Broke the Descending Triangle Pattern

EURUSD Daily Chart – Broke the Descending Triangle Pattern

If we look at the volume indicator then we also notice that the volume is also very large at the same breakout candle, which also validates the breakout of the triangle. If a candle is large enough and the volume is also big at the same time, then that indicates the participation of traders in a very large number and eliminates or reduce the chance of any kind of market making by the market makers.

So, this breakout of the descending triangle pattern indicates potential bearish momentum for the upcoming weeks. The next key support levels are the 1.1275, 1.1120, 1.0860, 1.0572

Potential Trade on Daily Chart: SHORT

 

4-Hour Chart Outlook: Although we saw breakout of a descending triangle pattern in the daily chart, here in 4-hour chart we can see a newly formed down trend setup according to swing trading strategy, since we got 2LH and 2 LL.

Now, if we draw the Fibonacci expansion level by connecting the most recent swing points, then we can see that the current price is now at the 100 Fibonacci Expansion level where a long legged doji candle has formed and signaling potential reversal point.

So, there is a good chance that price will rise up from this 100 FE level by confirming this as the new Lower Low level and down trend confirmation at the same time.

So, if we draw Fibonacci retracement levels by connecting the current swing high and swing low points, then we can assume that the 38.2, 50% or 61.8 Fibo retracement levels are the most potential levels where we might find a strong bearish candle to go for Short trade entry.

Or, price will consolidate by staying at the current price zone before making its next move towards the downward direction.

Potential Trade on 4-Hour Chart: Long(Temporary)

 

Summary: Price just broke the bottom line of a descending triangle pattern on EUR/USD daily chart, and by using the pattern breakout strategy we can assume that the price will continue to go down.

But since price is also at the Bottom/LH or 100 Fibonacci expansion level in 4 hour chart, we can also assume that the price will rise up for the retracement/correction of the latest fall or breakout. We can expect up to (+-)110 pips of retracement before the final bearish journey towards the downward direction.

Although all of the indicators explained here signalling bearish momentum of EUR/USD, still there’s good chance that the price will turn back and rise up at the bullish direction. So, trade on your own risk and never forget to use tighter stop loss.

 

Key Support Levels:

Support Levels: 1.1275, 1.1120, 1.0860, 1.0572

Fibonacci Expansion Levels: 1.1275, 1.1110, 1.0915, 1.0565

(Both the Manual support and Fibonacci expansion levels aligned almost at the same price zone)

Important Alert : The analysis shared above is just for educational purpose only and not provided as any mean of trading signal. Price can completely change its direction without obeying any rules and methods explained above. Don’t forget to use stop loss and trade on your own risk.  

 

 

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