Since the start of the year when EURUSD bottomed this fx pair has mainly moved sideways in a corrective pattern. Prices have been grinding higher in an upward sloping wide channel with two notable spikes at 1.1450 and at 1.17. In both cases the bullishness was not sustained and prices reversed strongly only to make higher lows.
EURUSD is currently trading inside a short-term triangle with notable support at 1.11 and resistance at 1.13. Currently I believe this pair will move higher towards the downward sloping red trend line near 1.13 for the last chance for traders to go short before the next big move which will be to the downside. However this next bearish move is only part of a bigger and more complex correction which I believe will not push this pair to parity. I believe it is more probable to make a double bottom near 1.05 and then start a big upward reversal towards at least 1.18-1.20.
The large decline from 1.40 to 1.0450 is contained within a downward sloping channel and I believe is over. Now I believe we are in the correction phase and that is why we move sideways. The weekly Ichimoku cloud poses a big resistance above us right now and that is why I expect prices to move towards 1.05 again regardless of whether we see 1.13 or not. The trigger will be at the 1.11 level. Breaking that level will trigger my alternative scenario where we are heading towards 1.05 without a bounce to 1.13. My alternative scenario is to push towards 1.05 and break to new lows. This will imply that the entire correction is over and the market corrected the decline only to the 38% retracement, which is a shallow retracement. This will be extremely bearish for EURUSD with targets below parity.
Concluding, traders should be focused on the downside and on the possible opportunity to see the 1.13 level again. This I believe will be the last chance to sell before we reach our yearly lows. Markets are a dynamic place of contradicting forces and strategies and views need to adapt to any new information. This is just my general road map that can change over time, but it gives the general view I have right now.
Thank you for taking the time to read my new post.