It has been a very volatile year for both Europe and the United States of America. We have seen the impact of BREXIT on the Euro and also the reaction to the US market from the presidential election of Donald Trump.
Despite the volatility of these two currencies we have notice a very long term price action setup forming over the last couple years.
The monthly timeframe confirms a the long term bearish trend since 2008.
The best way to predict the future is to study the past. The monthly chart shows EURUSD has a key trading price. As you can see above price has rejected or consolidated around 1.05000 a number of times over the years. There was a bullish rejection candle off 1.05000 in 1997. This pair consolidated in 1999 around the same price. Now we have more consolidation around this key area, which makes this pair very interesting for trend traders.
Now we understand the bigger picture lets zoom into the Weekly chart for more immediate set ups.
We have used zone areas to identify support and resistance areas. Price has been consolidating for the last 2 years and has resulted in a bearish flag pattern. Remember the longer the consolidation the bigger the breakout, but be patient because 1.05000 is a longterm resistance level.
As EURUSD has been in a long term bearish trend we favour this pair to continuing falling beyond 1.05000.
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