On Wednesday the 8th of November, trading on the euro/dollar currency pair closed slightly up. The euro traded against the dollar within a narrow range of 1.1579 to 1.1611 (32 pips). During the US session, sellers tried to break the 1.1580 support, but fell short. The price then restored to 1.1599.
The main reason for the dollar’s decline was the decision to delay cuts to the US corporate tax rate by a year. This led to a partial reduction in the short positions opened by sellers after the breakout of 1.1660 (neckline of the head and shoulders model).
Day’s news (GMT 3):
- 09:45 Switzerland: unemployment rate (Oct).
- 10:00 Germany: trade balance (Sep), current account (Sep).
- 12:00 Eurozone: economic bulletin.
- 13:00 Eurozone: European Commission releases economic growth forecasts.
- 16:00 UK: NIESR GDP estimate (Oct).
- 16:30 Canada: new housing price index (Sep).
- 16:30 USA: initial jobless claims (3 Nov).
- 16:45 Eurozone: ECB vice president Vitor Constancio speech.
- 19:30 Switzerland: SNB chairman Jordan speech.
- 21:00 Germany: German Buba president Weidman speech.
- 21:20 Eurozone: ECB's Lautenschläger Speech.
Fig 1. EURUSD rate on the hourly. Source: TradingView
Yesterday’s predictions turned out to be true. The price spent the day trading within a narrow range below the trend line. In the end, we got a bullish surge from 1.1554 and the A-A channel. At the time of writing, the euro is trading at 1.1604. The price is currently at the upper boundary of the A-A channel and the trend line. In whichever direction the price exits the 1.1579 – 1.1600 range, the price will continue in that direction pending further developments.
Looking at the current pricing model on the hourly timeframe, I’m inclined to predict a breakout of the trend line with subsequent growth to the 90th degree at 1.1662.
If the 67th degree holds buyers up, the head and shoulders model will still be on the cards. We can forget about this model, however, if the price reaches 1.1660 because some bullish signals are forming on the daily timeframe, which will bring new buyers into play.