FX.co ★ Technical Analysis of EUR/USD for December 20, 2023

Understanding the Euro's Current Trajectory Amidst Fed Statements

The EUR/USD pair is at a crucial juncture, influenced by recent statements from Federal Reserve officials. Key points include:

• Richmond Fed's View: Thomas Barkin highlighted progress on inflation, suggesting a balanced approach between inflation and employment.
• Atlanta Fed's Stance: Raphael Bostic sees no urgency for rate cuts, expecting a gradual inflation decline.
• San Francisco Fed's Caution: Mary Daly warned against overtightening, emphasizing the balance between price stability and employment.

Technical Outlook for EUR/USD

The pair has shown resilience, bouncing from 1.0889 to a local high of 1.0988. Notable aspects include:

• Bullish Momentum: Movement towards 1.1018, underpinned by a potential Cup and Handle pattern.
• Support and Resistance: Key support at 1.0829, with resistance at 1.0915 and 1.0966.
• Projected Target: The Cup and Handle pattern suggests a target around 1.1310, a 2.66% advance.

Weekly Pivot Points Analysis

Pivot Points are crucial for understanding market dynamics:

• Upper Levels: WR3 - 1.1289, WR2 - 1.1149, WR1 - 1.1022
• Central Pivot: 1.0882
• Lower Levels: WS1 - 1.0755, WS2 - 1.0615, WS3 - 1.0488

Long-Term Trading Outlook

On the weekly chart:

• Reversal from Fibonacci Level: A reversal from the 61% Fibonacci retracement at 1.0963.
• Bearish Pressure: Despite the reversal, the pair remains under bearish pressure without a clear swing low.
• Key Support: Located at 1.0666.

H1 Intraday Indicator Analysis

Intraday signals offer mixed insights:

• Technical Indicators: 3 suggest a Buy, 4 Neutral, and 14 a Sell.
• Moving Averages: An even split, with 9 indicating Buy and 9 Sell.

Market Sentiment Overview

• General Sentiment: Predominantly bullish, with 69% bulls vs. 31% bears.
• Recent Trends: Consistent bullish sentiment over the last week and three days.

Strategic Trading Insights

For traders:

1. Long Position Consideration: A break above the current resistance in the Cup & Handle pattern could be a signal for a long position.
2. Stop Loss Strategy: Set stop losses, considering the 50-period DEMA and potential reversals.
3. Breakout Monitoring: Watch for a breakout above 1.1018 to confirm the pattern.
4. Utilize Additional Indicators: Supplement with sentiment analysis and other indicators for confirmation.
5. Target Level: Consider the 1.1310 level for long positions.
6. Stay Cautious: Be aware of shifts in 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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