Analysis Technical Analysis Trading Tips

Technical Outlook on Euro FX Futures (6E)

  • Euro trading below $1 for the first time since 2002
  • Bearish sentiment remains
  • Potential bounce possible in the shorter term
  • Consolidation zone on the hourly chart

Rewind 2 weeks

Looking back at the analysis we did on the Euro on August 19th, our call for the break below $1 has been realized. With such a strong psychological level, we expected some bids to flow into the market, which has recently happened with spinning tops and ‘unclear’ candlesticks on the daily chart.

Euro FX Futures daily time frame
Daily Chart

What to Expect Next?

Taking a look at the hourly chart, there is a strong consolidation zone between 0.99275 and 1.00495. This shows indecision in the market on the longer time frames. Range-bound trading while in this zone can be fruitful with traders looking to go long toward the bottom of the zone and to go short toward the top.

Sentiment remains bearish, so any short trades taken at the top of the consolidation zone could prove to be great risk-to-reward ratio trades, as our analysis suggests that there is a greater probability for price to eventually break out of the zone and continue the bearish momentum. 

Hourly Chart

We still see a lot of downside in the Euro as the Federal Reserve continues to raise interest rates. With no sign of this changing any time soon, we expect the market to continue to fall with obvious retracements and consolidation periods in between. Shorting at the top of the consolidation zone marked above and holding through a potential break below the zone could be considered a  good trade.