It certainly appears that the stars are aligning for some EUR strength to come in. First, let start with the market’s high expectations of a dovish ECB. The dovish bar is extremely high for tomorrow’s meeting, and it will likely be difficult for the EUR to sustain dovish moves after the fact barring an over delivery of expectations. We have already heard ECB members suggest the market is overpricing expectations, but the market can be stubborn. Let’s have a look at what price is telling us, and what key levels we are approaching.
Here we see the POC (point of control level) of the rally from 1.6285. This is where the highest amount of volume came in during the entire rally.
This chart below is showing an ending pattern on the 8 hour chart heading into that major support.
Of course our analysis would be incomplete without at least taking a look at the EURUSD, which also appears to have ended, or be ending a weekly cycle via diagonal.
EURJPY looks like it has already ended it’s cycle via diagonal (wedge).
Finally, EURGBP looks to be completing an abc pullback after a 5 wave rally.
Bottom line, we have a lot of mounting evidence that a EUR turn is likely coming. Now we just need price to confirm it. With the high dovish bar for the ECB it wouldn’t be surprising if that is when we get our chance.
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