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EURUSD Falling Wedge Hints at 2019 Rally

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Over the weekend I hinted at a large wedge pattern on EURUSD.

I figured I’d wait for the new year to comment on it further. However, I’m not so sure the market is going to wait.

Now, I want to start by saying that the trend is still bearish.

That will continue to be the case until buyers can clear the 1.1450/70 resistance area on a daily closing basis.

I mentioned this horizontal zone last week. But what I didn’t show is the long-term trend line that intersects with this level.

Under most circumstances, 1.1450/70 would be an area to sell from.

However, a view of the 2018 price action hints at a very different path for the euro.

The falling wedge in the chart below could signal a turn higher for EURUSD in 2019. 

In fact, it suggests much higher prices.

The height of the wedge is 1,000 pips, so the objective for a break higher would be just below the 1.2500 handle.

I’m sure many of you are shaking your head in disbelief.

The euro is weak, and will continue to be weak, right? There’s no way the currency is going to rally 1,000 pips in 2019.

But the truth is that nobody knows where EURUSD is going.

Over the years I’ve learned that the strongest moves often begin when the market as a whole is least expecting it.

Look no further than the 1,000 pip decline in 2018.

If I had told you the EURUSD was going to lose over 1,000 pips when everyone was bullish back in April 2018, you probably would have been skeptical then too.

My point is that thinking you know where a market is going is a dangerous business.

It’s better to let the market do the talking. And right now, EURUSD is signaling that the 2018 selloff may be nearing an end.

But as I wrote last week, bulls have more work to do.

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EURUSD weekly wedge pattern

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26 comments
Daks says

Let’s wait and see

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Heshan Wijayarathna says

thanks bro

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Ruth says

EU is acting weird let’s what happens,

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Vuyo says

I’m honestly one of those that is really shaking my head coach. My analysis long term is bearish on this pair. Again, the truth is no body knows. You have the pedigree and expertise

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Davy says

Its gambling because you don’t know what is going to happen.More interst hikes in USA is that not a stronger dollar?

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    Vuyo says

    Davy, Justin knows this business very well. He’s a expert and thats why we benefit from his analysis. Its not gambling but as i expert you know by now, trading is all about probabilities and possibilities. When you’re disciplined in your account management, you will grow a healthy account. Greedy people will blow their accounts

    Reply
      Davy says

      Hey Vuyo I have learned alot from Justin for sure.But al those news events tweets can shakes things up.

      Reply
Uzoma Nnamdi says

OK sir

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Latota says

Thanks Justin.

I too believe the sell off is coming to an end. But let’s wait and see.

Bless up yourself Justin

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Enyo says

I quiet agree with this analysis for a long term but as it always goes the market always has the final say, so let wait for the boss. Nice work man

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Howard says

The European economy is slowing & much weaker than the US economy. ( growth 1.6%, unemployment 8.1%, inflation 1.9%, interest rate 0%)). ie. ECB has no reason to increase interest rates.
The Euro had risen in late 2017 on hopes of an interest rate increase, which did not happen. It’s now possible interest rate may not increase till 2020. In my view, EURUSD could stay between 1.16 & 1.12 until economic news improves (Germany & Italy) & political uncertainty resolves (eg. Brexit, Italy, France)

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    Howard says

    Having considered the fundamentals, I take your point Justin that it is the Market that leads & we follow. Personally I prefer to fade counter trend rallies when they are unsupported by fundamentals, but I have learned to wait till the bigger trend resumes.

    Reply
Stevo says

In my point of view, if it dsn’t break the rsstnt u mean, it’ ill go to make the final move down to 1.1210 for a dble bttm…

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ghulam says

if u people see my previous prediction i usually get sudden buy at the end of yr ,, to me it will not go below 1.1300 , anyhow from last 2 months i m watching scalp trading videos , download and watching again and again in our trading house only a few people r making huge money rest of house loosing certainly commonly 90 percent people have no knowledge at least here in pakistan , now i see people should concentrate on scalp trading and u can make money , i have seen a lot of trading including me to persist on one direction and ultimately suffer more loss, since i started i daily make a few than nothing just a
suggestion thanks

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OGBORO preciouslife says

Thanks man

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Bcee says

Justin is one of the few traders i hold in high esteem! the only reason i will agree partially with Justin is bcos i can see some trend reversal on the daily chart of EurAud (double bottom) & GbpNzd (inverse H&S Pattern), that gives more credence to Euro in the short term. I can also see the Aud & Nzd struggling with Usd making lower lows that means Usd strength still prevails. Am also seeing a stronger Gbp than Euro in the short term (monthly chart), Its more or less a mixed reaction bcos i know Eur, Gbp, & Aud are more likely to move in tandem over USD strength…. My view is that USD will make a finally move before we see other moves materialize…

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Ibuchukwu carlton muoweta says

Excellent analysis

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nazry says

looking buying

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Rafal says

Great analysis, as always! I’ve been following DPA since few months. It helped me a lot, but more patiance and confidence in entering trades is something I need to improve.

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DANIEL says

I totally agree with Justin, my analysis comes to it same. Add volume to your chart and do PVA or VSA and you will see EURUSD and the sister pair GBPUSD is building hidden strength. Go further slap stochastic on that chart for indicator lovers. See that it is Oversold on W1 and handing in the middle in D1. Meaning, a likely drop one more time before a full bullish display! Of course all are opinion…we will see

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DANIEL says

when*(if) it drops to Resistance @ 1.1275 and shows a powerful PA Signal like pinbar or inside bar or even better Hikkake Pattern, I will do a dare devel buy off that support.

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Sumantra kumar halder says

Excellent experience

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Francis Ejike says

Great one fundamentals may eventually line up with the bullish setup, EUR/USD is oversold expect a pull back, even if the 1000 pip target is not achieved, we should still see descent profit. My preferred entry is break and close above the trendline on a daily chart, pull back to the trend with a very tight stop 20 to 50 pips. Potentially great R:R

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Derrick says

I see that I can save 40% to join lifetime membership before 31st. So how much should I pay because I see there are few days remaining

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Kevin says

Interesting!

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