On Friday, the EUR/USD currency pair attempted to initiate a downward correction but was unsuccessful. The euro currency quotes continued to trade above the moving average line through the end of the day and the following week. Remember how, despite being ordinarily close by in recent weeks, the price could not even beat the moving in the strictest sense of the word. According to our assessment, this is already pushing the bounds of reality because, if things continue, the euro will soon reverse the two-year downward trend. The only option now is to hold out hope that the market will wake up and remember the pair's sales since this is impossible. If not corrective. Of course, there are such illogical periods as this one. All they need is experience. You'll recall that the pair was in a flat for about four months, which is also not the best choice. You have to accept that there is no logic to the current movements and that any fundamental or macroeconomic background is seen as favoring the euro.
Technically speaking, there aren't any issues at all. It needs to be the right time to open long positions because a clear upward trend is at play. Since only the euro currency is increasing, you can only pay attention to statistics or current affairs at different times. Therefore, it is not advised to consider short positions even though the price is above the moving average. Keep in mind that particular technical signals must support any fundamental premise. If there are none, there is no need to attempt to "in advance" formulate the hypothesis.
It is possible to skip the new week's preview.
We review the first article's upcoming fundamental and macroeconomic events every week. However, there is little to say or write about at the moment. The only event on the EU calendar for the following five working days is a speech by ECB Vice-Chairman Luis de Guindos as of Monday. This one incident is unlikely to impact the market's mood. Moreover, the technical situation had stayed the same since last week, when there were more than enough significant events. Of course, there is always the possibility that after the weekend, the market will resume trading more logically after it has had a chance to process all the new information. Specifically, it will start the significant downward correction we have been anticipating for the past three weeks. Nevertheless, there is no point in considering the fundamental background because, in the first place, it does not exist, and, in the second, it will still have no bearing on how the pair moves.
On the eve of a new week, we can only say that the outcomes of the meetings between the ECB and the Fed did not favor the euro. Formally, only the ECB announced the start of the QT program at the beginning of the following year, which was an unexpected "knight move." But if the BA and the Fed have already started similar programs for a long time, what about this decision is "hawkish"? We are interested in the relationship between the ECB and the Fed's decisions and the ECB's actions. The movement of the pair (whether the dollar or the euro is currently rising) is determined by this ratio. Even Christine Lagarde's comments about multiple 0.5% rate increases in the future have no special significance. Additionally, the Fed will keep raising the rate for several additional meetings. Additionally, for a considerable period, the Fed rate will be higher than the ECB rate, which should again favor the dollar rather than the euro. Therefore, the US dollar should increase no matter how you view it. It should be increased, even if only by 400–500 points.
As of December 19, the euro/dollar currency pair's average volatility over the previous five trading days was 104 points, considered "high." So, on Monday, we anticipate the pair to fluctuate between levels of 1.0480 and 1.0687. An upward turn of the Heiken Ashi indicator will indicate a potential continuation of the upward movement.
Nearest levels of support
S1 – 1.0498
S2 – 1.0376
S3 – 1.0254
Nearest levels of resistance
R1 – 1.0620
R2 – 1.0742
R3 – 1.0864
Trading Suggestions:
The EUR/USD pair is continuing its upward trend. With targets of 1.0687 and 1.0742 in the event of a price reversal from the moving average, we are now considering opening new long positions. Only after fixing the price below the moving average line with targets of 1.0498 and 1.0480 will sales become significant.
Explanations for the illustrations:
Determine the present trend with the aid of linear regression channels. The trend is currently strong if they both move in the same direction.
Moving average line (settings 20.0, smoothed): This indicator identifies the current short-term trend and the trading direction.
Murray levels serve as the starting point for adjustments and movements.
Based on current volatility indicators, volatility levels (red lines) represent the likely price channel in which the pair will trade the following day
Relevance up to 01:00 2022-12-20 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
