EUR/USD: Trend Up?
I wrote back in Dec 2016:
If we see a similar propensity for a try lower in Jan 2017 then we could see the start of the next phase in this market - the 2nd leg of a Bearish Halfway Hesitation with potential down to just below 0.8400. It is not too early to say it but it is too early to be sure.
We didn't see such a 'propensity'. Rather we had a lower Jan 2017 (1.0337) than a Dec 2016 (1.0350) though as you can see, by a few points. Nevertheless, these tics lower make a difference...not as you would imagine in trying to justify a renewed fresh attempt lower but as a key trigger in a new Pattern - a Key Reversal Up on the Yearly Charts. Though it is only by less than 20 tics (and less than evident on the Monthly Chart above), it s i l l is a Key Reversal Up! Please note that the last Yearly KR prior to this was the KR Down of 2014 and we can easily see that the market had a significant follow through on that one, so there is some form here. The next thing is the KR Up formed over Nov which you can see on the Monthly Chart above. Additionally, we have the Golden Cross of the 1 Year MA up over the 2 Year MA.
All these indicate Bullish behaviour...so where now? Well, the first thing halting any move higher is the 5 Year MA (currently 1.1992). This halted an earlier attempt mid 2017 but not enough because as a direct result of the fall back we saw the Nov's KR Up. The next is the series of lows in 2008 (1.2328), 2010 (1.1875) and 2012 (1.2040) plus some others (more on that shortly), all of which are seen as slowing or halting any rise. Then there is the 50% Fib of the 2001 - 2008 move at 1.2132 which is coincident with some lows in 2010 and 2012. After this there is the nearby 2014 - 2017 50% Fib at 1.2164. All these are significant obstacles with yet more - the 2008-to-date Downtrend (currently 1.2700) further away also on top.
However, the action of 2017 so far may be indicative not just of KRs Up but also of a possible Bull Flag. If so the target for such a move would be in the region of 'X' on the Chart above (just under 1.3200). To negate such a potential move higher the market would need consecutive Monthly closes back under the 61.8% Fib of the 2001 - 2008 move at 1.1210...we'd only be going in to Neutral if we did do that. On this basis and bearing in mind only two MAs are actively pointing higher, I've moved the bullet point above into mildly Bullish.
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