EURUSD: Long term forecast and multitimeframe analysisIn this chart I illustrate the different facets of the trend in the Euro.
It's clear to me that we're about to witness a large short squeeze rally, as evidenced by the following technical landmarks:
Rgmov is moving up in the weekly and daily, not validating the recent decline (which also happened during very low liquidity sessions)
There's a potential time at mode uptrend in the weekly and daily, which can start to work in the coming week. Targets for it match a monthly range expansion validation target roughly, and it sits right below the low volume resistance (which also matches a 0.618 retracement of the whole decline since the 2014 high where this leg started to the lowest low)
Majority of retail bears, but commercials are net long
Weekly moving averages of the lows and highs tell a vivid story, with lows not moving under the low MA and the highs about to be taken out, this usually precedes a breakout.
In the big picture, fundamentals for Europe and the United States show a divergent monetary policy, with the potential for a very bearish outcome for Europe, with the expectation of further easing as the situation is worsened by separatist movements, war, overall poor economic indicators, and a series of rate hikes for the dollar. I can determine if the rally was a short squeeze after the fact as well, so I'll be paying close attention to unleash the perfect short when the time is right.
The bond market is showing an increase of yields is expected in the near term, with bearish price charts for BUXL and US T-Bonds, which adds more fuel to the short squeeze rally thesis as well.
As for the stock market, going by Tim West's long term forecast of sideways and not clearly bullish acitivity, it's only natural to see short term bearish dollar as well.
To add more to my thesis here, there is a quarterly range expansion bar target that wasn't reached in time, which implicates a potential rally to start off this zone. I don't think we will cross the low volume resistance, and I expect to see bearish continuation once the daily uptrend time and price targets are met.
I will give signals to take advantage of this very interesting pair to my private group, if interested in learning more about it contact me via private message.
Cheers,
Ivan Labrie.
Time at Mode FX
