Ever since late October, it's clear that Mario Draghi is determinate to keep the EUR weaker in order to boost local growth, which means fundamentals are aligned towards a weaker EUR. Technically, and taking a look at the wider time frames, the EUR/USD pair is trading some 200 pips above its multi-year of 1.0461 posted last March, and there's a good chance that, on a bearish continuation below it, the pair will extend its decline down to 1.0206, July 2002 monthly low and the immediate support. Below this last, parity is more than likely for the first half of 2016, particularly if the US triggers a second rate hike in March as suspected.
Read: Central banks to continue trying to achieve 2% inflation in 2016
_20151119145145.png "EURUSD weekly chart")
Parity will indeed be a major psychological support, which means that a break below should only fueled the panic sell-off, down to 0.9600, where the pair has several monthly highs and lows from 2001/2. A strong EUR seems out of the picture for now, with advances up to 1.1000 being seen as barely correctives by market players. Should the pair recover above this last, it will need to retake the next resistance, at 1.1250, to confirm a bullish continuation during the upcoming months that can extend up to the 1.1440/90 region, where the pair's advance stalled several times over these last few months.
Read: Central banks to continue trying to achieve 2% inflation in 2016
Parity will indeed be a major psychological support, which means that a break below should only fueled the panic sell-off, down to 0.9600, where the pair has several monthly highs and lows from 2001/2. A strong EUR seems out of the picture for now, with advances up to 1.1000 being seen as barely correctives by market players. Should the pair recover above this last, it will need to retake the next resistance, at 1.1250, to confirm a bullish continuation during the upcoming months that can extend up to the 1.1440/90 region, where the pair's advance stalled several times over these last few months.
EURUSD Point & Figure Charts Forecast by Gonçalo Moreira, CMT
From a long-term perspective, as portrayed in the 3-box reversal chart below, the EUR/USD is really under the pump. The large column of Os -where each box corresponds to a 200 pip depreciation- drawn from the 1.3900 top is the one anchoring the objective bearish line (in red) dictating the bearish trend since last year. As long as this line is not violated, a point and figure analyst will consider the trend as bearish.
On this same resolution we don't have a double-bottom continuation signal yet. Only a firm break below 1.06 would print the sell signal and invalidate the green line nascent from a 1.0600 box. Likewise, only a close above 1.18 would generate double-top signal and threaten the 45 degree objective trend line.
If we visit the EUR/USD 1-box reversal chart we can establish an horizontal count on both directions. On the upper side, a break above consolidation points to 1.4200, while on the way South, and reafirming the 3-box analysis, the calculation brings us below the historic low of 0.8400 to 0.8200
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