Market Update – December 20, 2017

Market Update – December 20, 2017

With markets in full holiday mood and no critical economic events ahead, the price action is likely to slow in the days ahead. However, there’s one big question mark due to the way one of the most important currencies behaves: the Euro.
Like it or not, the Euro move to the upside was the central 2017 theme, at least in the Forex market. Other markets, specifically in the crypto universe, saw more significant moves this year, but Euro is the king of the Forex market this year.
The EURUSD move from the 1.04 area to almost 1.21 happened in only a few months during the summer, taking everyone by surprise. After all, the common currency was supposed to fail, right?
Precisely the opposite happened: the GDP rose, unemployment fell, Greece came back to the markets, Portugal’s debt got upgraded, and even the Italian economy looks better than the United States’ one.
Moreover, France’s Macron transformed into a new European leader with a bold, young vision, and Brexit uncertainty seems to fade away. It’s no wonder Euro look good and will probably squeeze higher even more.


The consolidation around current levels has one significant level insight: the 1.20 psychological one. Since September, the pair flirted with it, with stops probably lingering above.
If those stops get to be triggered, we should see a move toward 1.24 area that, in Elliott Wave’s terms, should be part of a running correction.


A four-month long contracting triangle is currently developing on the four-hour time, with a bullish break being imminent. When that comes, the 140 is the level to watch, as the next squeeze’s target.


The level here is the 0.90. Every dip has been bought and every attempt to survive above 0.90 failed. Not for long.
In fact, on a squeeze above 0.90, we should see an accelerating move towards new highs, as many bet on Brexit creating flows in the other direction. However, being a Euro move, it will have support via streams in different currency pairs.


While the USD remains in ranges against other currencies, the Euro seems to be ready for the next leg higher. The current consolidation that happened in the last month only shows an energy-building process that most likely will lead to traders being squeezed.
As such, beware of unexpected moves in a low-liquidity environment that should see the Euro propelled higher.

Also published on Medium.

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