Long-Term Technical Outlook For The EUR/USD

Posted Saturday, July 28, 2018 by
Shain Vernier • 2 min read

If you have followed FX Leaders for any period of time, then you have been shown literally hundreds of pricing charts. From bullion to Bitcoin, we present technical and fundamental analytics on a daily basis in the hopes of shining some light on the inner workings of the financial markets.

With a bit of luck, at least some of our analysis has helped you become a profitable trader. If not, stay tuned. There are over five months left in 2018 and a myriad of opportunities headed our way.

One of the most scrutinized and heavily traded instruments in the world is the EUR/USD. In this article, we will take a step back and look at the long-term prognosis of this forex favorite.

The Value Of

Multiple time frame analysis is the practice of analyzing charts with different durations in an attempt to craft valuable trading decisions. There are several advantages to using this approach:

  • Gain Perspective
  • Identify Important Support And Resistance Levels
  • Quantify Trends

When applying multiple time frames, working long to short is the best way to fully grasp exactly what a market is doing. In the spirit of multi-time frame traders, let’s dig into the monthly EUR/USD chart and see if we can identify some keys for the second half of 2018.

EUR/USD Monthly Technical Outlook

The EUR/USD monthly chart gives us a striking picture of the 2014-15 sell-off and subsequent rebound.

EUR/USD, Monthly Chart
EUR/USD, Monthly Chart

Since May’s test of the 1.1500 handle, the EUR/USD has consolidated near the monthly Bollinger MP and 38% retracement of 2017’s low to 2018’s high. This piece of information is fascinating. On shorter time frames, the 1.1675-1.1700 area holds no real meaning aside from being a round number. The monthly chart shows us that it is an area of converging technical indicators and critical to this market.

Technically, the EUR/USD remains in the uptrend that began in January of 2017. However, in the event that price breaks out of its doldrums, it may enter a full-blown correction very quickly.

Overview: In my opinion, there are three levels to watch closely for the rest of 2018. They are simple, but critical to many long-term EUR/USD investors and institutional players:

  • Resistance(1): 2018’s High, 1.2554
  • Support(1): 38% Macro Retracement, 1.1709
  • Support(2): 62% Macro Retracement, 1.1187

Only time will tell if the uptrend of January 2017 to February of 2018 will remain valid. Odds are we’ll know by early Fall if the USD is primed to continue its recent ascension.

All in all, the second half of this year will be a fun time to trade forex. With so many questions surrounding trade wars, U.S. FED policy, Brexit, and ECB bond-buying, almost anything can happen to the Greenback or Euro. If and when it does, we will be ready.

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