Hi, and welcome to today’s Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, we’re going to look at EUR/USD, and we’re going to discuss whether we think the trend will change.
As you can see we’re on the weekly timeframe, the price has been moving quite aggressively to the upside with that US Dollar weakness.
We’ve had a good few weeks of that US Dollar weakness. EUR/USD is gaining off the back of that, we’ve moved about 500 pips to the upside over the past two months. A decent move higher, breaking through some key levels. So, 1.12 was the first level that it broke through, then 1.14-1.15, and it continued from then on. It found a little bit of resistance around 1.18. If we look left, there is some decent resistance from that point in the past, back 2018 and 2017. But, the market was up here and found some support and resistance previously. I quite like this potential reversal because we’ve now got a few things to consider. First of all, we’ve got the where the US Dollar index is. And EUR/USD is pretty much the inverse of the US Dollar Index. You can see that the price come back down into that key 93 US Dollar level and is potentially looking for some buyers to step back in here. It has gone oversold on the RSI on the weekly timeframe. Typically, when the price does this, we do see some reversal form. It’s the same for EUR/USD as well. When we see those oversold conditions or overbought conditions, we typically get a move to the opposite direction. For me, EUR/USD could be the one to change as well.
The second point is the seasonality that we looked at last week or so typically shows that the US Dollar finds a reversal through the end of July or the start of August. So, we’ve got to consider that as well, and the fact that we’re at these key levels.
What we need to wait for is some confirmation, and how will that look?
On the daily timeframe, we have a nice bearish candlestick, and we’ve moved a long, long way. So to me, if we were going to find some resistance, here, I’d want to map out where could price go.
I like the 1.15 area. That’s an area that we’ve looked at where we expected the market to retest. If we are going to see some pullback we could see the market come and retest at 1.15. If I look in the past, you can see all that resistance and support to this level. One thing we should ask is: where could the price go? That key level, there. Next step is, how am I going to trade that to that point? What I like to look at is the four-hour trend and see how the four-hour trend develops.
The four-hour trend changes the likelihood that we’re going to see that continuation and you can see that, down here, when the four-hour changed, through here.
Now, look at this nice uptrend that we saw out of EUR/USD. I’m looking for that to change. I need to see some lows broken. Currently, this is the swing low that I like to look at. The price is close to that. It has moved down to near those close, which can sometimes be a good sign that the price will move downside. What I’m waiting to see is if we’re going to get some change in simplicity. If we get the change in the cycle, and what I mean by that is if the market starts forming lower lows and lower highs, we can start looking to short this market in line with our potential bias of the seasonality reports. I am looking for potential for this market to dive back down into that 1.15 area.
How can we trade that? So, we could look for a head and shoulders pattern. Like, if the market rallies back to the upside maybe retest 1.18 again, rejects it, pushes back to the downside. We could look for a double top pattern where the market rallies back up, and retests that previous structure high and then rejects the downside, or we can look for a standard change in the cycle, and currently, that would be a break and close below this low, through here. Then we’d look for that continuation move.
All in all, the EUR/USD trend could be about to change. So, keep an eye on this. If it does start forming lower lows and lower highs, look for the market to trade potentially back down into this 1.15 support zone.
Thanks for watching this video update. If you like what you see please like and subscribe to the YouTube channel for some more trading content, and I’ll speak to you soon.
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