Macro EUR/USD Analysis: 1.1908 Is The Magic Number

Taking a step back from intraday price action and looking at the macro trend is a good exercise. Often, the view from 10,000 feet can tell us which way price is going and expose flaws in our trading. So, where is the EUR/USD likely to end up for 2017 and how do we make money in the meantime?

Macro Technicals

The EUR/USD has rallied with a vengeance since January. The weekly time frame gives us a clear look at the strength of this market.

EUR/USD Weekly Chart- Bold Move Since January

This week’s trade has taken the EUR/USD below the previous week’s low for the first time since late June. It is a notable occurrence and may be the precursor to sideways price action or outright failure.

The key 38% Fibonacci retracement of 2017’s range is in at 1.1309. For now, we will not argue Elliot Wave counts and the appropriate highs/lows to use for our retracement. Simple is good, and 2017’s range is pretty basic.

1.1908 is the yearly high established last week. The June failed sell-off also traded down from a yearly high before moving higher. This is important to note. The key psyche level then was 1.1300 and now it is 1.1900.

The key area to watch is 1.1900-08. We are not done testing this area.

Bottom Line: Until we see a serious bearish component to the market, I will be looking for bullish patterns on the daily charts to get in long. When price approaches 1.1908, short-term sells with solid R/R’s will be available using the yearly high as a concrete out.

On a time frame as large as the weekly, fundamentals determine the market's ultimate direction. The EUR/USD will need a catalyst to enter a full-blown correction. This Fall’s monetary policy announcements from the U.S. Fed may be that catalyst.