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EURUSD Reminds Traders to Stay Flexible

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The EURUSD has been indecisive of late, to say the least. It’s become the epitome of the “holiday lull” I often discuss this time of year.

The lack of liquidity around the year-end holiday season prompts sideways movement such as this.

Yesterday I pointed out the two false breaks in November. The first occurred on the 19th and the second took place on the 27th.

This has led to increased confusion among traders.

Should you be buying or selling EURUSD?

I’d argue that neither is a good option right now.

Unfortunately, many traders forget that doing nothing is always an option. And in most cases, it’s the most appropriate option.

But rather than turn this into a lesson on patience, I want to point out why I think doing nothing and staying flexible is ideal given the euro’s recent behavior.

It’s no secret that EURUSD is bearish.

Since 2008, the single currency has carved lower highs and lower lows.

EURUSD monthly view of downtrend

The currency pair is also down in 2018 and trending lower since the most recent swing high in late September.

So why on earth should we stay flexible? Why not just sell the euro?

For one, the pair is sideways as I mentioned at the beginning of this post.

In situations like this, it’s usually best to stand aside and let the market break free from consolidation.

However, there’s another reason I’m not overly bearish here.

But before I get into the details, I want to make it clear that I am by no means bullish. I’m merely pointing out one possible scenario.

Since dropping below 1.1430 on October 24th, EURUSD has carved what could be a short-term bottoming pattern.

Note the shape of the three swing lows in the chart below.

Those lows could be the making of an inverse head and shoulders pattern.

I say “could be” because euro bulls would need to take out the neckline up near 1.1430 to confirm the reversal.

But again, I want to clarify that I am by no means bullish EURUSD.

These three swing lows could be nothing more than sideways movement before the next push lower begins.

It pays to stay flexible in situations like this; quite literally.

Not only will you be able to take advantage of a short-term bullish scenario should it arise, but you also won’t be wasting capital in the meantime.

As long as last week’s low of 1.1267 is intact, this pending reversal pattern has a fighting chance.

If buyers can confirm it with a daily close above the 1.1430 area, it would expose 1.1530.

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Beyond that we have 1.1620 followed by 1.1730.

On the other hand, a move below last week’s lows would significantly reduce the odds of a bullish reversal.

And if sellers take out 1.1215 support on a daily closing basis, it would open up downside targets.

For now, though, a seat on the sideline is fitting given the indecision of late.

Stay patient and remain flexible in your approach. This one could go either way, so it’s best to ready ourselves for either outcome.

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EURUSD daily time frame

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19 comments
Vuyo says

Makes perfect sense, thanks for the sound analysis.

Reply
    Justin Bennett says

    You’re welcome. Glad to hear it.

    Reply
Said says

I really appreciate your analysis.Thank you very much Justin.

Reply
    Justin Bennett says

    Anytime! Have a great week.

    Reply
Sera says

Thank you Mr. Spot On

Reply
    Justin Bennett says

    You’re welcome, Sera. 😉

    Reply
Elizabeth says

Hi Justin. How can I become a member?

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Zacks says

Wonderful thanks

Reply
Ralph says

Hi which broker are u trading with?

Reply
Diogo Neves says

Hey do you believe this is the time to short AUDUSD?

Reply
Sy Ha says

Down..thanks you

Reply
    Justin Bennett says

    We’ll see. You’re welcome.

    Reply
Arif says

Terimakasi pak justin atas analisa ya.
Saya seneng dengar ya

Reply
SAMINATHAN says

awesome analaysis

Reply
    Justin Bennett says

    Cheers, Saminathan.

    Reply
Arif says

Terimakasi pak justin atas analisa ya

Reply
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