Hi Traders! EURUSD forecast follow up and update is here. On January 5th I shared this “EURUSD Forecast And Technical Analysis” post in my blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
Looking at the daily chart we could see that the price has created two false breaks (marked in yellow dotted lines) which we may consider as evidence of bearish pressure. In addition to this, we have a bearish divergence that has formed between the first high that has formed on 17th December 2020 and the second high that has formed on 30th December 2020 based on the MACD indicator. Also, we could see this bearish divergence on both the RSI indicator and CCI indicator as well, which we may consider as other evidences of bearish pressure. There is also a good possibility that the price might still create new highs and test the 1.2350 level. Until the strong resistance zone shown in the screenshot below holds my view remains bearish here.
EURUSD D1(Daily) Chart Current Scenario
Based on the above-mentioned analysis my view was bearish here and I was expecting the price to move lower until the strong resistance zone holds. The price respected the strong resistance zone and moved lower exactly as I expected in my analysis, delivering 200+ pips move so far.
The market provided us with various facts supporting the bearish view on the H4 chart. The price created a false break with bearish divergence between the first high that has formed on 31st December 2020 and the second high that has formed on 6th January 2021 based on the MACD indicator. The price then moved lower and broke below the most recent uptrend line. We may consider these as facts provided by the market supporting the bearish view, also there were no signs opposing this bearish view. Then as you can see in the screenshot below how the price moved as per the plan.
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
So, traders, this is why I wanted to show this example to help you understand how important it is to follow the facts. The facts were supporting the bearish view here and there were no signs against it. When the facts do happen as we expected you can see how the price perfectly moved as per the plan. Because these are the kind of hints the market provides us at majority of the times and it’s our obligation as traders to be able to listen to these things that the market tells us and we should try to make the right actions.
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