EUR/USD forecast for the week of December 25, 2017, Technical Analysis

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The EUR/USD pair rallied a bit during the trading session’s that made up the previous week, reaching towards the top of the bullish flag that we have been in. I remain bullish of this pair, and I think that 2018 is going to be very good for the EUR. · FX Empire

Christopher Lewis

Updated Fri, Dec 22, 2017, 10:58 PM

The EUR/USD pair rally during most of the week, but gave back a bit of the gains on Friday. Ultimately, the market looks as if it is ready to try to break out above the bullish flag that I have marked on the chart, which would be a very strong sign that we are going to go to the 1.32 handle above. I think that’s a story for 2018, and therefore I’m looking at short-term pullbacks as buying opportunities, just as a breakout would be. I would add slowly, because I anticipate that the 1.20 level is going to cause a significant amount of psychological resistance, and most certainly the 1.21 level will be resistive as well. I think that the market will break above there though, and given enough time have us looking for opportunities to add to the position, and perhaps build drastically.

I think you have time though, because this week will be very quiet due to a lack of volume. As traders come back to work after New Year’s Day, I think that gives us an opportunity to get involved. Add to your position slowly, but become much more aggressive above the 1.21 handle. This could be the trade of the year, as the EUR has been so oversold for so long. Alternately, if we were to break down below the 1.15 handle, we probably go looking towards the 1.13 level underneath, which should be structurally positive as well.