EUR/USD Forecast October 19, 2017, Technical Analysis

The EUR/USD pair fell on Wednesday, reaching down towards the 1.1740 level, then bouncing enough to form what looks to be a hammer for the day. If we can break out to the upside, and especially the 1.18 level above, the market should be ready to take off at that point. We are forming a bit of a “W pattern” on the hourly chart over the last couple of days, which of course is very bullish. Also, we are in a longer-term uptrend so it makes sense that this pair should continue to the upside. I think that the 1.18 level will be resistive, but I also recognize that there’s even more resistance above at the 1.20 level. Because of that, it’s more than likely going to be a “buy on the dips” type situation, as the markets continue to be very noisy.
If we did breakdown below the bottom of the W pattern, then I think the market could go much lower, perhaps reaching down towards the 1.15 level over the longer term. That was the scene of a major breakout that had originally measured for a move to the 1.25 handle above, and that is my target longer term. That’s not to say it’ll be easy to get there, and I think that the 1.20 region will continue to be very difficult to get through. However, once we break through that area, the market should take off as it would be free to pick up momentum clearing such a major hurdle. I don’t have any interest in shorting, and I believe that if we do break down below the bottom of the W pattern, you should probably sit on the sidelines and wait for an opportunity. Longer-term, I am bullish of this pair.