It’s no secret that I’m bearish on EURUSD.
Most of my recent commentary has been tilted toward looking for short entries.
I also have a EURUSD short position from last week at 1.0852, as shared in the member’s area.
Many will disagree with my outlook, and that’s okay.
Today, I wanted to take a step back and show you one reason I’m sticking with my bearish euro outlook.
I primarily trade from the higher time frames due to the greater conviction you get from breakouts on the 4-hour and daily charts.
Even the name of this website hints at using the daily time frame to analyze markets.
The reason is simple: There’s more volume in higher time frame candles, and more volume equals greater conviction.
So a daily chart is more convincing than a 4-hour one, a weekly chart is more convincing than a daily one, etc.
With that in mind, most would assume a monthly chart is as high as you can go.
But the highest time frame, at least for most, is the 12-month chart, where each candle is one year.
And the EURUSD broke a massive 39-year trend line in 2022, as shown on the 12-month chart below.
Each candle in the chart above is one year, and the trend line starts with the 1984 closing price.
The euro was created in 1999, so the chart above uses the pre-euro basket of currencies to populate data before 1999.
Touches on this trend line include 2000 and 2001, 2017, and 2020.
A closeup of the level shows how the EURUSD closed 2022 below the 39-year level, and the year-to-date high tested it as new resistance.
It’s near impossible to argue that this is a mere coincidence considering how well EURUSD has respected the level since its inception nearly 40 years ago.
As long as the EURUSD year-to-date high of 1.1033 stands, my macro bearish outlook is intact.
Another insight from the chart above is the 2022 long lower wick.
Long wicks like that tend to get filled, and a quick Fibonacci analysis puts the 50% level at 1.0515, which we saw tested earlier this year.
However, the golden pocket comes in between 1.0222 and 1.0284, while the 78.6% retracement is 50 pips below parity.
Given everything above and the other markets I watch, a deeper retracement this year to fill in the 2022 wick seems likely.
As for the short-term, the 1.0740-1.0760 area is the one to watch.
It’s serving as support for now, but a daily close below it opens up the 1.0650 channel support I discussed in Saturday’s weekly forex forecast.
If EURUSD loses that support in the coming days, a more significant correction toward 1.0530 and lower seems likely.
Alternatively, a daily close above 1.0930 would start to negate the bearish outlook, especially if 1.1033 resistance fails.
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Hello 🤗 sir,your 12 month time frame analysis is amazing, it’s good to know such a pro like u Justin, still trying to become member of the discord,I’ll keep up until I succeed
la operativa actual y los medios que la sustentan, desde mi punto de vista, convierten el forex EURUSD en una situación totalmente aleatoria.
hace 23 años que opero y desde hace 8, únicamente, este par.
y la experiencia me dice, que ahora ya se, que no se nada.
consigo un 80% de operaciones positivas y con todo, mi confianza siempre está bajo mínimos. la razón….?? ponme un patrón que se cumpla y yo te pondré al lado otro que no lo cumplió…
“As long as EURUSD YTD high 1.1033 stands, a macro bearish outlook is intact.” This is pure gold Justin. Great chart work.
Very good analysis. To support this analysis, I would like share with you a monthly chart (EURUSD) There is beautiful triangle in monthly time flame, triangle support was broken in April 2022, now it is being retested. February candle formed a bearish engulfing candle from triangle support that has now turned resistance. Unfortunately I have failed to attach the chart on this comment.
Hi Justin, For over weeks now, I have been unable to join the new group Crypto academy as the link that was sent could not permit me join. Please help