05.12.201910:17 Forex Analysis & Reviews: Analysis and forecast for EUR/USD on December 5, 2019

Hello, dear colleagues!

As expected in the previous review of the main currency pair, the growth continued. However, the technical picture was extremely interesting and quite controversial.

Before moving on to price charts, a bit about the external background and macroeconomic data. As for the December meeting of the ECB chaired by Christine Lagarde, the vast majority of market participants expect the European Central Bank will not change the parameters of its monetary policy and will keep the deposit rate at 0.5%.

Regarding statistics from the United States - while it does not shine. For example, yesterday's data on the change in the number of employees from ADP came out much weaker than economists had predicted. With expectations of 138 thousand, the actual figure was only 67 thousand. However, as noted earlier, Friday's official data on the US labor market will determine the results of the current trading week, among which investors will focus on the unemployment rate, average hourly wages, and data on the number of new jobs created in the US economy (Nonfarm Payrolls) in November.

It is generally accepted that data from ADP is generally considered to be a leading indicator before nonfarm releases. However, there are exceptions to every rule, and this is not always the case. If Friday's US labor reports are weak, investor fears of a possible recession in the United States will intensify significantly and the US dollar will be under selling pressure across the market spectrum. In the case of positive data, "American" will win back from the main competitors all the positions lost by that time.

This can be argued from fundamental analysis, but there are also technical factors that often have a stronger impact on the course of trading.

Daily

The assumption that the euro/dollar will go to update the highs of the previous week was fully justified. As a result of yesterday's growth, the pair soared to 1.1115, but could not stay at the achieved heights and rolled back to the opening price of trading on December 4.

As a result, a bearish candlestick analysis model "Long-Legged Doji" appeared on the daily chart, which indicates a potential decline. However, the older and stronger (in terms of signals) weekly timeframe still has a bullish look.

As expected in the previous article, most likely, the final alignment of forces at the trading on December 2-6 will be known on Friday, and it will affect the American labor reports for the past month.

In the meantime, on the daily chart, the pair is trading near the 89 exponential moving average and the Kijun line of the Ichimoku indicator. Alternately closing the day trading above and below 89 EMA and Kijun indicates the uncertainty of market participants in which direction to move the course further. In the run-up to Friday's payrolls, such cautious investor behavior is understandable.

At the end of this article, I will outline the trading ideas that are currently the most relevant. I emphasize that this is a personal opinion of the author, with which everyone has the right to agree or not.

So, the opening of long positions looks the most attractive, in my opinion, from the price zone of 1.1065-1.1050. Earlier, and therefore risky purchases, you can try with current prices near a significant level of 1.1080.

I continue to consider the main scenario to be upward, so I consider sales as a more risky positioning on EUR/USD. However, if bearish candlestick patterns appear on the 4-hour or hourly charts around 1.1085-1.1100, you can try to sell with a stop loss for yesterday's high of 1.1115 and small targets around 1.1065-1.1050.

Successful and profitable trades!