The EURUSD maintained a bearish momentum in 2008, topped at the 1.6038 levels, and bottomed at the 1.2330 levels, since then, pressure becomes on the 1.2330 levels, the EURUSD will have to hold below the 1.2330 levels on a yearly closing basis to push the market for further downside losses, If seen , It will target the 1.1640 levels, a halt is strongly suggested , but losing this level will bring a free fall towards the 0.9990 levels.
Alternatively, a failure to hold below the 1.2330 levels on a yearly closing basis, could mean a return to the 1.6038 levels, If seen a breach is likely, above 1.6038 would target the 1.7170 levels 127.2% projection of 1.1876 / 1.6038 run, further break will aim the 1.8610 levels 161.8% projection of the same run .
Description : If we back to the past 4 years, you could easily notice that the pair failed to hold below 1.2330 levels, basically this zone 1.1640 / 1.2330 served as strong demand in the past 4 years, If you back to the yearly chart again, the pair put a fractal below the year of 2010 at 1.1875, in other words . the key support 1.2330 was rejected in 2010, the pair found support at 1.1875 levels.
This development suggests a risk to back towards the 1.6038 levels, according to yearly chart, a yearly close above the 1.3485 levels – 2012 high – is likely to recapture the 1.6038 levels , a yearly close below the 1.2857 – 2011 low – will flip bias back towards the 1.200 levels and possible lower, so keep an eye on it next December !
However, let’s shift down to monthly chart and see what happened in the past 4 years, we have 3 bullish events :
1- The pair formed a reversal pattern, inverted head, and shoulders pattern around 1.2330 levels during the past 4 years.
2- The bullish divergence of % R – Williams indicator still in progress, and it could send the pair further higher, It’s an early warning that consolidation from 1.6035 levels is likely over.
3- The pair has breached above the key resistance 1.3283 – at the beginning of this year, but probably it’s a false break, so to escape away of sell-off, the pair needs to hold above this level on a monthly closing basis, If seen, it will target the 1.3870/1.4025 levels, a halt is strongly suggested, but a clear break would aim the 1.4866 levels, above this level will flip bias back for retesting the 1.6035 levels.
On the downside, when the pair rose from 1.2042 levels, it found support at 1.2875 levels, so as long as this level holds on a monthly closing basis, the risk will remain high for a rally up towards the 1.4000 levels, stability below 1.2875 levels on a monthly closing basis will flip bias back to the downside towards the 1.2042 levels.
Note that we had one break above 1.3283 levels, followed by a break below the 1.2875 levels, both breaks look false, so this is a strong sign that there’s uncertainty in the market , most likely it’s ready for an explosion, anyway , probably the next break above 1.3283 or below 1.2875 would give us a clear clue about the next destination !!
Conclusion : as long as the key support 1.2042 holds on a monthly closing basis, the pair will remain bullish with risk towards 1.4000/1.5000 levels, losing 1.2000 levels on a monthly closing basis would suggest that the key support 1.2330 in long term has failed to contain fall from 1.6035 levels, and the pair will extend weakness towards 1.16 levels, in other words, the next trading zone will be around 1.16 the upcoming years before the next rise..
On a weekly chart, as long as 1.3230 holds on a weekly closing basis, the strong and sudden rise is suggested, losing this level on a weekly closing basis would flip bias back to the downside towards the 1.2800/1.3000 levels…
Support and resistance levels on monthly :
1.0760 , 1.1375 , 1.2033 , 1.2875, 1.3283 , 1.3870 , 1.4025 , 1.4866 . 1.6035