- 6E has surged through the long-term down channel.
- The most apparent price zones to watch in the medium term.
- Fibonacci Fan Analysis on 1-Hourly chart.
Euro Surges Out Of Downward Channel Due To a Weakening Dollar
We have been tracking the Euro’s downward channel for some time now, and for a while, it seemed the price would never stop falling. However, we are reminded once again that market sentiment can switch at the drop of a hat, and that’s exactly what happened to the Dollar last week when the CPI data came out better than expected. The Dollar has taken a big hit, falling 7.8% since its peak in September.
The 6E futures is essentially just the EUR/USD pair traded in a futures contract and so what we have seen recently is not a strengthening in the Euro but an overall weakening in the Dollar.
Price Zones To Watch
6E is currently trading above the zone at $1.03965. This zone acted as resistance for two or three days before today’s session broke through. This has not been confirmed yet, as we need more price action before the conviction can be strong. Moving forward, this zone may act as support if prices drop back down into it.
If the price continues to rally, the next most apparent zone will be at $1.06820. We could see a higher-than-normal amount of selling at this level because it was a small liquidity zone back in June of this year.
Fibonacci Analysis on the Hourly Chart
The hourly chart is looking very interesting at the moment. The zone at $1,03965 is visible on the chart below, and the consolidation within the zone is a lot clearer. Looking to the Fibonacci fan for potential trend lines, the 50% time level (Bold Green) is the primary support line at the moment.
There are three potential outcomes here, with the first being that the 50% line may continue to hold as the price rallies toward the upper zone at $1.06820. If that line is broken, we could expect to see some consolidation before breaking higher or lower. On the other hand, the price could just drop through the zone, although it may seem unlikely at the moment due to the weakening of the Dollar.
The Fibonacci fan is an excellent tool in technical analysis, and it’s definitely not appreciated enough. Check out this short video which explains the basics of the Fibonacci fan if you want to learn more about it.
Summary
Markets across the board are very sensitive to the Fed’s stance on interest rate policy. Even though the US still has 7.7% inflation, the better-than-expected number has given great optimism in the markets, with stocks rallying and the Dollar falling. With the next FOMC meeting coming in the second week of December, it’s a waiting game now for traders and investors alike.
