EURUSD could be the chart to watch through to the end of December as the USD continues to weaken.
But what are the key levels to watch out for?
Watch the video to learn more…
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, we’re going to take a look at EUR/USD and have a little look at what could potentially happen next.
So we featured the EUR/USD in the recent Forex Market Outlook video. We talked about how the US Dollar was weak and if I bring in the strength and weakness chart, through here. We can see that the EUR/USD trend was likely going to continue because we had the EUR, which was gaining strength, and the US Dollar, which was losing strength.
We talked about the potential for this market to continue to the upside. What’s quite interesting is where we could see the price going to next and if you haven’t watched that video, we talked about this potential block of orders, over here.
So, you can see where we see these candlesticks, and they’re accumulating, and we’re getting a lot of buying and selling going on in this zone. The market usually wants to go and test those areas of structure again. There’s a lot of orders going in and around this area, here – around the 1.2250 area – which we spoke about in this week’s Forex Market Outlook video. So, we’re expecting EUR/USD to continue that pace and head towards the upside towards the end of the year. Usually, through December and we see the US Dollar lose strength, and that’s what we’re seeing here at the moment. We’re expecting that market to continue to push to the upside into this area, here, where we could see some longer-term downside in the market in line with that seasonal report as well.
Now, going into the daily timeframe, we can see the market always gives you evidence that the trend isn’t going to continue. And if we look at these candlesticks, in particular, they’re low in range, and what I mean by that is that they’re closing back within each other’s highs and lows. And typically, when we get that happening, the market is set to continue that trend. It is very much like this pullback here: you can see the market closing back within these ranges and this move here as well. The market is closing back within the candlestick ranges, and we get the continuation trades. So, whenever you see these shallow moves in the markets, that’s where you need to start paying attention to move ahead.
Now, if I go to the four-hour timeframe, EUR/USD created a couple of nice moves, which we’ve waited for the breakouts of. Now one was a false breakout move. So, we’ve identified this zone here. We had a previous resistance point, supported the market, then broke through it, then it tried to close below these lows, which it eventually did. However, the candlestick, here, then closes back within that previous candlestick low. This means that we had a false breakout of that level.
Now, we have this market creating a little bit of a flag pattern since we had this market rally up and then we’ve got these consolidation lows and all these highs, in there.
What I’m looking for is a break and retest of these previous structure highs on the four-hour timeframe. So, if I was to go into the likes of a 15-minute timeframe – let me jump back to the four-hour and plot that in here and let me zoom in a little bit – I’d want to see some significant closes above this level first. So, if the market was breaking to the upside, making those clear higher highs in here, what I’d be looking for is that pullback into this zone. Change in the cycle, and a long trade up towards that 1.2250 level. But at the moment, the market is in that nice little consolidation phase. We’ve got the market making literally higher lower highs, but we’ve also got the market finding support.
So, finding consolidation, big zone ahead, 1.2250 from these previous weekly consolidation zones. We’re expecting the market to retest this zone and so, we’re looking for a breakout on this four-hour chart for some further upside.
Thanks for watching this video, and I’ll speak to you soon.
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