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On Christmas Eve I discussed the potential for a EURUSD rally in 2019.
The falling wedge that began during the first half of 2018 suggests that sellers are running out of steam.
Many of you emailed me about a potential head and shoulders pattern on the weekly time frame.
However, I never thought it was one.
The neckline of a head and shoulders should either be horizontal or ascending. It should never be descending.
If it is, there’s a good chance it’s a falling wedge and not a head and shoulders.
That’s exactly what happened with EURUSD.
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What many thought was a neckline of a bearish pattern was actually the floor of a bullish falling wedge.
The EURUSD hasn’t quite broken free just yet, but buyers aren’t far away from doing so today.
I mentioned on Sunday that it was going to take a daily close above 1.1450 to confirm the breakout.
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With more than five hours to go, anything can happen. But all in all, EURUSD looks relatively bullish from where I’m sitting.
I know that goes against what many out there think about the euro, but that’s why I like the idea.
It also agrees with what’s happening to the U.S. Dollar Index (DXY).
This was a rare case where the index foreshadowed a EURUSD breakout.
On December 28th, the DXY broke down from a rising wedge pattern. It’s the inverse of the EURUSD which is what we’d expect.
I’ve been discussing the relationship between the two markets inside the member’s area for the last couple weeks.
I also shared my EURUSD long position at 1.1360 with members last week.
The goal is to add to the position following a daily close above the 1.1450 area. Until that happens, I will keep the position relatively small.
A close above 1.1450 would expose 1.1530 followed by 1.1620.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.
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