FX.co ★ Technical Analysis of EUR/USD for December 18, 2023

Understanding the Current Dynamics in EUR/USD: Cup & Handle Pattern

Technical Market Outlook:

The EUR/USD pair is showing promising signs of growth, rebounding from 1.0889 to approach 1.1018. The H4 time frame suggests a Cup and Handle pattern formation, indicating a possible breakout above 1.1018. This bullish pattern is supported by strong momentum, with the key support at 1.0829 and resistance at 1.0915 and 1.0966.

Examining Moving Averages:

• 100-period EMA (in red): Lies beneath the current price at 1.0851, previously indicating bearish trends now possibly reversing.
• 50-period DEMA (in green): Stands at 1.0887, just below the current price, reinforcing the bullish sentiment.

Price Movements and Patterns:

• The Cup & Handle pattern suggests a rise, with the handle now forming.
• A successful pattern completion could lead to an upward price trajectory toward the 1.1000 level.

RSI and Momentum:

• The RSI at 57.59 reflects moderate momentum, neither overbought nor oversold, supporting potential upward movements.

The Cup & Handle Pattern Explained:

This pattern begins with a bowl-shaped 'cup' formation, followed by a 'handle' indicating a trading range. A breakout from the handle often signals a trend continuation. However, traders should seek additional confirmation to avoid false signals.

Projected Targets and Indicators:

On a daily scale, the target for the Cup and Handle pattern is around 1.1310, potentially a 2.66% advance. The pattern's reliability is enhanced by multiple technical indicators and sentiment analysis.

Weekly Pivot Points:

Pivot Points are vital for identifying potential reversals. For the EUR/USD:

• WR3: 1.1289
• WR2: 1.1149
• WR1: 1.1022
• Weekly Pivot: 1.0882
• WS1: 1.0755
• WS2: 1.0615
• WS3: 1.0488

Intraday H1 Indicator Analysis:

- 16 out of 22 technical indicators are showing Buy signal, 4 indicators are Neutral and32 shows a Sell signal

- 14 out of 18 moving averages are showing Buy signal, 4 are showing Sell Signal

Strategic Trading Insights

Potential Actions:

• Traders might consider a long position if the Cup & Handle pattern breaks above the current resistance, with a cautious eye on the RSI for signs of overbuying.
• It's important to set stop losses, considering the support level at the 50-period DEMA and potential reversals if the pattern fails to materialize.
• Monitor the EUR/USD pair for a breakout above 1.1018, validating the Cup and Handle pattern.
• Utilize additional indicators and sentiment analysis for trade confirmation.
• Consider the 1.1310 level as a potential target for long positions.
• Remain cautious and watch for any shift in the sentiment or indicator signals.

Useful Links

• More Artcles
• InstaForex Course for Beginners
• Open Trading Account

Important Reminder

The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.

Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.

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