06.01.202010:34 Forex Analysis & Reviews: Analysis and forecast of EUR/USD for January 6, 2020

Hello, dear colleagues!

Well, another trading week on the Forex currency market ended, and it was crowned by the minutes of the Open Market Committee of the US Federal Reserve.

As expected, there were no major changes in monetary policy in the minutes of the last FOMC meeting. However, several Fed officials were wary of low-interest rates and their negative impact on the country's financial sector. Against the background of a likely breakthrough in trade relations between the US and China, as well as an extremely low probability of the UK's exit from the EU, global risks are shifted to the downside. The main conclusion that can be drawn from the published minutes, the Fed will keep rates at current levels for some time. In general, everything is expected and quite predictable. Now it's time to move on to the main currency pair charts. On Monday, as usual, we start with the weekly timeframe.

Weekly

So, the assumption that a reversal bearish candle will appear on the weekly chart was justified. In fairness, we must admit that this is not a "Tombstone" model, but a "Rickshaw". To avoid confusion in the names of models, and a sufficient number of "Doji" varieties, it is easier to determine whether a particular model has a reversal or not, as well as its strength.

In this regard, I would like to note that the "Rickshaw" is certainly a reversal model of candlestick analysis. But its strength compared to the model "Tombstone" is slightly less.

Nevertheless, the market often works out a similar model. Given where the last weekly candle was formed, the closing price, as well as a false breakdown of several important and strong resistances, the chances of working out a bearish candle "Rickshaw" only increase.

If you look closely at the sales of EUR/USD, and this is, in my opinion, the main trading idea, there is one rather unpleasant moment. We are talking about a protective stop-loss order, which, in theory, should be made for the previous highs of 1.1238. Agree, this is too big for a stop, so we will look for more acceptable options on lower timeframes.

Daily

But on the daily chart, the situation is different. After Friday's candle with a long lower shadow, it is time to count on the subsequent strengthening, which means to prepare for the purchase of the pair. However, the contradiction between the weekly and daily candlesticks, as a rule, leaves the priority for the signal from a higher timeframe. However, each rule has its exceptions.

As an option, there may be attempts to restore, and it is very interesting and important how the price will behave in the area of 1.1174-1.1183. This is where the technical level is falsely broken, and the 233 exponential moving average is located.

If the players on the increase will be able to raise the rate to 1.1183 and close the daily trading above this mark, we can assume the subsequent strengthening, the goals of which will be 1.1190, 1.1210, and 1.1238.

The downward scenario will become even more obvious if the daily session closes under the Tenkan line of the Ichimoku indicator. With this outcome, I expect a decline in the area of 1.1110-1.1088, where the Kijun line, 89 EMA and 50 MA are located. In general, the picture for the main currency pair is quite contradictory. Right here and now it is difficult to make decisions about entering the market. Perhaps it is better to wait for a little and see in what direction the market wants to move. The euro/dollar may try to adjust at first, and then turn to decline.

Of the macroeconomic events that this week may affect the price dynamics of the euro/dollar, it is worth highlighting the most significant reports from Europe and the United States.

Eurozone: consumer price index, as well as PMI, unemployment rate.

USA: consumer price index and data on the labor market (Nonfarm Payrolls).

You can learn more about these and other macroeconomic reports by looking at the economic calendar.

Have a nice day!