From a technical point of view, the EURUSD currency pair is aiming at the round level of 1.1000 to retest it on large timeframes after it was broken from above downwards in early October. It should be noted that on medium (15 minutes to 1 hour) timeframes the retest was performed on October 9. But according to the hypothesis of multifractality in chart analysis, the retest is accomplished by a conditional wave from small intervals to large ones.
The macroeconomic justification for further strengthening of EURUSD is the current interest rate differential between the Fed and ECB. In the eurozone the rate is now 3.4%, while in the US it is 5.0%. That is, the Fed now has much more opportunities for policy easing than the ECB. From this point of view, the EURUSD pair is set for an upward movement.
According to the technical analysis, trend reversals of any financial instruments aren’t V-shaped. Even when a quality reversal takes place, as a rule, there are repeated breakdowns towards the losing direction trend. But such breakdowns also require a strong news background.
If we look at the EURUSD chart on the 4-hour timeframe, we can see that the upward reversal of the pair started to form in the last week of October, and the market needed at least one more downside breakout, but there was no suitable occasion. Such an occasion was provided by the preliminary results of the US presidential election. Amidst this news, the pair quickly tested the previous local minimum at 1.07700, “shaking off” the excessive buyers and clearing the way up to the first target at 1.08320.
The final recommendation is to buy EURUSD.
The profit could be fixed at the level of 1.08320. The Stop loss could be placed at 1.06340.
The volume of the opened position should be set so that the value of a possible loss, defined with a protective stop order, doesn’t exceed 1% of your deposit.
This content is for informational purposes only and is not intended to be investing advice.
