6e daily chart with long trade oneup trader funded trader program
Technical Analysis

Euro futures (6E) bullish reversal on the cards?

Introduction

This daily chart of the 6E futures (Euro Futures) shows a few key technical levels and patterns amid some macroeconomic uncertainties. Currently, there is considerable tension surrounding the Euro’s strength, driven by the ongoing immigration crisis in Europe and the approaching U.S. election, which may strengthen the U.S. dollar due to shifts in U.S. monetary policy. These factors could pressure the Euro, influencing its price against the dollar and affecting this chart’s patterns.

We should keep this in mind as the Election is only a few days away and it could whipsaw traders out of positions if not correctly managed.

Daily 6E chart Euro futures oneup trader funded trader program

Technical analysis

Resistance Zone (1.10265 – 1.10410):

    • This area has acted as strong resistance multiple times throughout the past year, with prices consistently facing rejection upon testing or approaching this level.
    • Future Implication: If the Euro strengthens despite the macro factors, a break above 1.10410 would be a high-probability bullish signal, potentially opening the path for further gains toward higher resistance levels around 1.13.

    Support Zone (1.04845 – 1.06305):

      • This zone, highlighted in green, has provided consistent support, especially around the lower boundary of 1.04845. This zone aligns with the ascending trendline, creating a converging support that reinforces the bullish structure of the chart.
      • Future Implication: Should the price fall back to this support zone, it may offer a high-probability long setup for traders betting on a bounce, especially if broader Euro weakness aligns with Dollar strength.

      Ascending Trendline:

        • The black ascending trendline has recently formed and the recent swing now might be a temporary low that sends the Euro up toward the resistance zone once more.
        • Future Implication: As long as the price respects this trendline, it suggests a bullish bias. However, a decisive break below it, especially in combination with a drop through the support zone, would signal potential weakness, possibly leading to further declines.
        zoomed in 6E daily chart for oneup trader funded trader program showing 50 day simple moving average and rising trend line

        Trade Setups

        Bullish Setup (High Probability):

        • Entry: If price continues to respect the ascending trendline and manages a daily bullish close like the one that is forming today (30/10/2024) then we could take a long position.
        • Target: Initial target at the resistance zone (1.10265 – 1.10410).
        • Stop Loss: Below the ascending trendline and recent low (around 1.08065).
        • Probability: High, given that support levels have been respected so far and the overall trend remains intact.

        2. Bearish Setup (Conditional Probability):

        • Entry: If price breaks below the ascending trendline and closes beneath the support zone around 1.06305.
        • Target: Initial target around 1.04845, with potential for further downside if macro conditions favor a stronger dollar.
        • Stop Loss: Above the broken trendline.
        • Probability: Medium to high, conditional on a break of key support levels, likely influenced by macro factors.

        Final Insights:

        • Short Term (Next few weeks): The Euro may test the resistance at 1.10410, especially if macroeconomic tensions ease and there’s a temporary weakness in the dollar. A pullback to the trendline could also offer a high-probability buying opportunity, particularly if the SMA provides additional support.
        • Medium Term (1-3 months): As the U.S. election approaches, any policies or indications of a strong dollar could put pressure on the Euro, making the support zone a potential testing area. In this timeframe, maintaining the trendline is critical for bulls to preserve the ascending structure.
        • Long Term (3-6 months): Given the broader geopolitical landscape, including potential U.S. policy shifts post-election, there is a chance for increased volatility. A sustained break above the resistance zone would indicate a bullish long-term trend, while a failure to hold above 1.06305 would shift the structure bearish, possibly driving the Euro towards lower lows.