Technical Analysis

Euro futures (6E) move into support zone providing possible longs

  • Pullback gives rise to possible long trades.
  • Fibonacci analysis, candlestick analysis, and two possible outcomes.
  • A true story about a currency trader from Dubai.


We have finally seen a decent sized pullback on the Euro futures as price has moved into a minor support zone. I called for such a move a few weeks back and stated it was the only trade I saw on the 6E chart.

Now that it is here, let us look at what the technicals are telling us and if its still a good idea to initiate long positions.

Technical Analysis

The minor support zone is the only factor right now, giving the go-ahead for a long trade. It is not enough for me at this point because of two factors.

The first is that the Fib 0.382 level is only a 1% fall away from being tested, and the recent daily candlesticks.

We could have ignored the Fib level only if the daily candlesticks pointed toward strong bullish momentum off the minor support, but there has been a Doji (a sign selling pressure is weakening) followed by two daily candles that have bearish wicks. If yesterday’s close was a bullish engulfer, this would be a different story.

6E Daily chart showing minor support level and fib levels
6E Daily Chart

Possible Outcomes

At current prices, we could see a consolidation period go on for a few days. In that case, we could look at initiating longs without waiting for a drop to the 0.382 Fib level.

The safer play would be to wait for the price to fall to the 0.382 Fib and then enter on a bullish candlestick reversal pattern.

A true story

Ahmed Khan worked as a currency trader in Dubai, United Arab Emirates. He was born and raised in the region and deeply understood the local culture and economy. He had always been fascinated by the world of finance and had worked hard to build a successful career as a currency trader.

One day, while monitoring the markets, Ahmed noticed that the value of the local currency, the UAE dirham, was dropping against the US dollar. He had a hunch that the dirham would continue to lose value, so he boldly decided to bet against it by shorting the currency.

At first, it seemed like his bet would pay off as the dirham continued to drop in value. However, soon after, the local government announced a series of economic reforms that were designed to boost the economy and strengthen the dirham. The announcement caused the value of the dirham to surge, and Ahmed’s trades started to go against him.

As the value of the dirham continued to rise, Ahmed found himself in a difficult position. He had invested a significant portion of the bank’s capital in his trades, and the losses were starting to pile up. He was under a lot of pressure to turn things around and was constantly monitoring the markets for any sign of a change.

One day, while reviewing the economic data, Ahmed noticed that there was a discrepancy in the data. He quickly realized that the government’s announcement was based on false information and that the economy was not as strong as it appeared. He made the decision to go against the market and bet against the dirham once again.

Ahmed’s bet paid off, and the value of the dirham started to drop once again. The bank’s profits skyrocketed.