An end to EURUSD’s 1,500 pip rise?

By Admiral Markets

A screenshot of this week’s economic announcements, taken directly from the MetaTrader 5 trading platform provided by Admiral Markets.

EURUSD – An end to a 1,500 pip rally?

Source: Admiral Markets MetaTrader 5, EURUSD, Daily – Data range: from Feb 24, 2020, to Dec 6, 2020. Performed on Dec 6, 2020, at 10:00 pm GMT. Please note: Past performance is not a reliable indicator of future results.

Past five-year performance: 2019 = -2.21%, 2018 = -4.47%, 2017 = +14.09%, 2016 = -3.21%, 2015 = -10.18%.

Since the low of the year at 1.0636 (dashed-horizontal blue line) recorded on 19 March 2020, EURUSD has rallied more than 1,500 pips higher. This has led to the 50-period (red line), 100-period (green line) and 200-period (blue line) exponential moving averages all pushing higher to confirm the uptrend.

However, the price now sits at the 1.272 Fibonacci overextension level of circa. 1.2132 – taken from the swing high of September 1 at 1.2016 to the swing low of November 4 at 1.1602 (as shown by the diagonal red line and subsequent Fibonacci lines.

The combination of a European Central Bank stimulus on Thursday may cause traders to rethink adding positions at these overextension levels with pullbacks towards the 1.2000 level interesting areas for buyers.

• Traders may opt to look for potential reversal patterns to identify clues of buyers exiting and sellers stepping in. Learn more in the ‘Price Action Trading Strategies‘ article.

GBPUSD – Approaching key resistance at a key time

Source: Admiral Markets MetaTrader 5, GBPUSD, Daily – Data range: from Jul 5, 2019, to Dec 6, 2020. Performed on Dec 6, 2020, at 10:10 pm GMT. Please note: Past performance is not a reliable indicator of future results.

Past five-year performance: 2019 = +3.95%, 2018 = -5.54%, 2017 = +9.43%, 2016 = -16.26%, 2015 = -5.38%.

The GBPUSD has finally reached its significant level of horizontal resistance at circa. 1.3479, as denoted by the black horizontal line on the chart. Buyers have found it difficult to break through this price level in the past with sellers turning up in November 2019 and September 2020.

With roadblocks still remaining in UK and EU trade negotiations, buyers may consider taking some profits at these levels to hedge against a possible no-deal scenario. It may be too early to suggest if sellers will step in just yet, as it will be dependent on whether the UK can secure a trade deal with the EU or not.

• Traders may opt to look for potential chart pattern formations such as double tops for clues on a reversal. If a trade deal is announced, breakout strategies may then become useful. Learn more in the ‘Trading Strategies Guide‘

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By Admiral Markets