FX618Analysis

EURUSD: What Story Is the Bigger Picture Telling Us?

Short
FX:EURUSD   Euro / U.S. Dollar
Most of us either are scalpers & day traders. A very few categories of traders perform swing and position trades, as it involves higher timeframe analysis possibly from 4H & above up until monthly candles. Here we analyze the EURUSD M charts and try to observe what the market is telling us on a larger scale!

Currently the price of the EURUSD is approaching a long term concrete ascending trendline that has been validated or tested on 3 different occasions. The blue horizontal lines on the M charts represent concrete psychological support and resistance levels which are highly efficient when utilized on monthly timeframes.

At the moment, the price is approaching or near the 1.10000 psychological support which also coincides with our long term rising trendline. With FED tapering faster and 2-3 hikes already priced in, the outlook for EURUSD on a larger scale remains dark in 2022. However as traders we should always trade with confirmation and seeing this trendline has been tested on multiple occasions and respected, we need for the monthly candle to pierce and close below this trendline and 1.1000 psychological support. After this a SHORT trade could be executed with the target being the next psychological support at 1.05000.

On the flip side, shall this trendline hold, the outlook for EURUSD would still remain bearish unless 1.25000 level and previous high is cleared. In short, the outlook remains bearish on both M & W timeframe for the EURO . On lower Timeframes such as the D & 4H, traders could possibly analyze to execute LONG trades but caution and confirmation.


With FED tightening priced in, it remains to be seen if the US economy would actually meet the expectations in 2022. if we see stronger data and expectations meeting, we could see the greenback appreciate and break this trendline. However if the opposite occurs, we should expect this trendline to hold.

Cheers, I hope you found this insight helpful. Happy holidays
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