Bullish Flag Formation: EURUSD May Target Above 1.10 Amidst Bullish Momentum
Burc Oran
November 17, 2023

EURUSD jumped after cooler inflation data from the US. The cooler inflation means a lower likelihood of further rate hikes (almost none, according to future and swap markets) and an increased probability of earlier rate cuts (perhaps in the second quarter of 2024) from the Federal Reserve (Fed). The market has already begun anticipating the earlier rate cuts, as US government yields fell sharply, and stock indices, as well as EURUSD, experienced a notable increase.

(EURUSD Market Profile – 1Y)

©Bloomberg

After the surge, EURUSD has formed a potential flag formation just below the 1.09 resistance. 1.09 was the anticipated target for market profile analysis in November and appears to be holding the price for now. Additionally, 1.09 represents a 100% extension of the early November surge. With the flag formation in place, EURUSD is currently trading within a range of 1.0830 and 1.0885 levels.

If the flag formation fails to break out towards the north, the EURUSD cross might experience a pullback towards the 1.0760-1.08 zone, possibly using this range as a platform for another upward move.

(EURUSD Hourly Chart)

©Bloomberg

Either a pullback or a breakout from the flag formation, EURUSD bulls seem to be in control at the moment. As long as the 1.0760 support holds, EURUSD is likely to make an attempt towards the 1.10 – 1.1040 zone. This zone will likely create a key resistance for the medium term if the upward move materializes. The 150% extension of the earlier November surge is at 1.1015, the lower line of the broken uptrend channel from December to September is at 1.10 and is slowly rising. In addition, considering the past year, volume above this zone appears to be lower, and attempts above it did not last very long.

For the remainder of the year, the trader may monitor the 1.076-1.08 zone as support, 1.10-1.1040 as resistance, and 1.09 as a pivot point if the fundamentals do not change significantly.

(EURUSD Daily Chart)

©Bloomberg

Stay informed with market news by subscribing to our reading list.

FTD Articles is a website prepared by FTD Limited's research team. FTD Limited is an online brokerage company offering products of Forex, Spot Metals and CFDs.
The ideas and the information shown here have no responsibility of any of the trading decisions made by the investors or the visitors of this site. Therefore, under no circumstances will FTD Limited nor FTD Articles be held responsible or liable in any way for any claims, damages, losses, costs or liabilities resulting or arising directly or indirectly from the use of website content. We recommend that you seek advice if you have not involved with trading before in order to prevent potential risks that may arise.

WARNING

Due to your regulatory authority, unfortunately, we cannot offer you our margin trading services.