Top-down technical analysis of Forex pair EURUSD
We decided to provide another brief top-down analysis outlining the basics of trading the EURUSD pair since it has shown to be the most popular among all of our funded traders. We will continue to provide you with more technical analysis breakdowns, as well as in-depth tutorials.
From top to bottom, we dissect the EURUSD currency pair chart and provide brief insights into the tools and excellent trading habits we employ. We looked at all of the instruments that our Forex traders trade, and the euro versus the dollar appears to be the most popular.
The EURUSD is the most popular currency pair to trade in standard trading since it has mild to moderate volatility and the dollar has a weekly fundamental impact.
Most Forex traders would like to trade with higher volume, however too much volume and volatility can make trading challenging at times. This is due to the market’s ability to move 50 pips in either direction, confusing everyone left, right, and centre.
We go over how a more relaxed swing trader would break down the chart to discover long-term opportunities in more detail. It’s all about refining our charting practices, and when we demonstrate any charting ability, our Forex traders always respond positively.
It’s important to remember that it’s not always about how effectively you can break down a chart. Risk and trade management are the first steps to becoming profitable. Technical analysis will only improve your probability and potential win rate.
Monthly EURUSD chart
We begin our technical analysis on the monthly EURUSD chart, as we normally do, by looking for large momentum movements, overall structure, and trends. Once we understand the candles, we can then map out our initial ideas with key levels.
The prior monthly candle on the monthly EURUSD chart was strongly bearish, with a lot of momentum carried down in the moving average, which is currently bullish on this timeframe.
We’ve also used the 200-month moving average as temporary resistance. Overall, the price action has been essentially squashed in a 300-400 pip range over the last 6 to 12 months.
Weekly EURUSD chart
Dropping to the weekly EURUSD chart allows us to gather a little more detail from a higher timeframe perspective. However, recent candles on this weekly EURUSD chart have shown a lack of clarity within that monthly range, with both higher lows and lower highs printed.
When this occurs over a long period of time, it is critical to take a step back and consider the overall direction, as well as interests that correlate. It could be the calm before the storm, with the break providing additional directional force in the following weeks.
Looking at negative scenarios, 1.1500 appears to be a possible target after spotting a Fibonacci movement from the 78.6 percent retracement level. This would remove all of the recent immediate lows on the weekly chart, potentially providing a safe level to place stops.
Make sure you remove the Fibonacci and other tools from your EURUSD chart breakdown once you’ve extracted the information from them. Throughout the timeframes, try to keep the chart as tidy as possible.
Daily EURUSD chart and lower
On the daily EURUSD chart, the bearish confluences appear to be growing, with the overall structure indicating a downtrend in alignment with the bearish moving averages, all of which have crossed to the downside, including the 200 daily moving average. We may see patterns emerge when we connect the dots from higher timeframes to lower timeframes, allowing us to locate profitable opportunities.
On the daily EURUSD chart, as we approach the supportive regions, we must be wary of the potential for manipulation and only short when all confluences are active, as well as your entry rules.
As we drop further into the 4 hour and 1-hour EURUSD chart, it’s easy to see that there is mess and not much clarity. We advise traders to sit on their hands and wait for the charts to show more structure and not be trapped in no man’s land.
On the chart, an hourly closure below the support and a break into the 1.1750 could present opportunities to move south. On the 4-hour timeframe, there is a visible downtrend, and maintaining that momentum can be quite profitable.
This isn’t a trading recommendation or signal; instead, we’re demonstrating ways in which traders can analyse charts for new investment opportunities.
Please feel free to contact us and we will provide further analytical breakdowns on various instruments, with a focus on lower timeframes.