Key Points:
-
ABCD wave remains intact despite volatility.
-
Parabolic SAR and EMA bias should see the A leg complete.
-
100 day moving average should see the B leg begin in the correct place.
After having a rather torrid week, it’s worth having a check up on the long-term technical forecast for the EUR which was discussed last week. Specifically, given the large sentiment swings experienced by the pair, the corrective ABCD wave pattern could have been compromised which could limit the upside moving ahead.
Looking first at the daily chart, despite the last week or so of volatility, the actually EUR remains broadly in line with the forecasted “A” leg of the ABCD wave. Indeed, the recent spate of sentiment swings has kept the pair traveling towards its inflection point around the 1.0770 mark which should be reached within the next few sessions.
As for the technical signals indicating that the pair retains the momentum to actually complete the current leg, there are more than a few. Namely, the Parabolic SAR remains suggestive of continued bullish momentum, as do the 12 and 20 day moving averages. What’s more, the MACD and RSI oscillators are bullish, and neutral respectively, which indicates that the EUR should still be inclined to rally further.
Additionally, the current position of the 100 day EMA remains consistent with earlier forecasts which should encourage leg “B” to form at the correct juncture. Due to this dynamic resistance, we should see the requisite reversal even if fundamental upsets do occur over the coming sessions. However, the transition of the stochastics in to an overbought status will also be beginning to encourage the bears to wade back into the fray moving ahead.
From a fundamental perspective, it might at first seem unlikely that we can expect to see the USD weaken substantially given the Fed’s incessant reminders that rates will be raised in 2017. However, much of this rhetoric has now been priced in and announcements from the central bank are beginning to lose their bite. Moreover, the ultimate destination of the ABCD wave would actually be consistent with the process of normalising US rates so the forecast should stand moving ahead.
Ultimately, we can’t discount the impact of the change in the US administration which could result in a rather bumpy few weeks. As a result, we could see further wide swings in price which could obfuscate the ABCD wave. Additionally, the unfolding Brexit drama will likely compound this volatility whichcould contribute to any potential confusion. However, on the balance of things, there remains a strong chance of this pattern occurring and it is worth following moving ahead.
Forex and CFDs are leveraged financial instruments. Trading on such leveraged products carries a high level of risk and may not be suitable for all investors. Please ensure that you read and fully understand the Risk Disclosure Policy before entering any transaction with Blackwell Global Investments Limited.
Recommended Content
Editors’ Picks
EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.