Euro Forecast Remains Intact Despite A Volatile Week
Blackwell Global | Jan 20, 2017 12:26AM ET
Key Points:
- ABCD wave remains intact despite volatility.
- Parabolic SAR and EMA bias should see the A leg complete.
- 100 day moving average should see the B leg begin in the correct place.
After having a rather torrid week, it’s worth having a check up on the long-term technical forecast for the EUR which was discussed last week. Specifically, given the large sentiment swings experienced by the pair, the corrective ABCD wave pattern could have been compromised which could limit the upside moving ahead.
Looking first at the daily chart, despite the last week or so of volatility, the EUR actually remains broadly in line with the forecasted “A” leg of the ABCD wave. Indeed, the recent spate of sentiment swings has kept the pair traveling towards its inflection point around the 1.0770 mark which should be reached within the next few sessions.
As for the technical signals indicating that the pair retains the momentum to actually complete the current leg, there are more than a few. Namely, the Parabolic SAR remains suggestive of continued bullish momentum, as do the 12 and 20 day moving averages. What’s more, the MACD and RSI oscillators are bullish, and neutral respectively, which indicates that the EUR should still be inclined to rally further.
Additionally, the current position of the 100 day EMA remains consistent with earlier forecasts which should encourage leg “B” to form at the correct juncture. Due to this dynamic resistance, we should see the requisite reversal even if fundamental upsets do occur over the coming sessions. However, the transition of the stochastics in to an overbought status will also begin to encourage the bears to wade back into the fray moving ahead.
From a fundamental perspective, it might at first seem unlikely that we can expect to see the USD weaken substantially given the Fed’s incessant reminders that rates will be raised in 2017. However, much of this rhetoric has now been priced in and announcements from the central bank are beginning to lose their bite. Moreover, the ultimate destination of the ABCD wave would actually be consistent with the process of normalising US rates so the forecast should stand moving ahead.
Ultimately, we can’t discount the impact of the change in the US administration which could result in a rather bumpy few weeks. As a result, we could see further wide swings in price which could obfuscate the ABCD wave. Additionally, the unfolding Brexit drama will likely compound this volatility which could contribute to any potential confusion. However, on the balance of things, there remains a strong chance of this pattern occurring and it is worth following moving ahead.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.