I was looking back on my analysis and I noticed that I had projected a test of the long-term ceiling around the 1.3800 level in April of 2014; however, today this pair achieved a level that was only a handful of pips short of 1.3800, three months or so sooner than anticipated.
I have gone back to the chart and re-drawn the top line on the Desktop version of FXCM Trading Station, which offers a ‘High-Low’ option for drawing lines, which is very important when drawing them on monthly charts, as the free-hand approach can lead to some errors of calculation… In this case, the line came a little higher, clear of price action, passing over at around 1.3900.
Therefore, the test in April may yet occur…but what I also found, which was fascinating, was that, like for the EUR/GBP pair (as highlighted in my video about that pair), there has been an eighteen-year cycle for price, bringing us roughly to the same level as in 1995; on the chart image that I attach here, you can see that we are back below that dashed black line, which was a resistance level back then, and which was broken with the 2008 market crash… a significant level, being positioned at 1.3820, which is roughly around the Fibonacci 0.50 level for the Dec.2005 low to Mar.2008 high (which is at 1.3780)…
Given that this level has held, so far, I still expect it to hold in the medium term; it will be interesting to see if my April 2014 projection will still have some significance.
There is a good chance that the EURUSD is going to stay range bound for quite for time. We may not see any significant movements until the ECB makes up its mind about easing or not.
Anything long-term, when it comes to forecasts, is subject to regular review and rethink, but it is good to engage in
forward-thinking. Also, when dealing with a multi-decade monthly chart, a tiny move up or down when setting down
a line on a chart can be many pips away, so it is good to aim for an open range rather than a precise number…
I believe higher time frame supply is in play for now on Euro, so on H4 I expect a move down to the lower yellow box over next week. Just need some decent bear pa to get things started. Dollar index shows similar story. I see the gap on euro but don’t feel it will be filled yet, lets see.
The middle (red) horizontal line is the 1.36(xx) level, which is Resistance for this month’s candle;
the high (blue) horizontal line is the 1.51(xx) level;
the low (blue) horizontal line is the 1.21(xx) level.
The 1.51 is the middle point or apex of a triangle made of five (or near-five) year cycles:
Ascending phase:
1998 - 2005: from 1.21 to 1.36;
2005 - 2009: from 1.36 to 1.51;
Descending phase:
2009 - 2014: from 1.51 to 1.36; 2) 2014 - 2019: from 1.36 to 1.21.
The last cycle is highlighted in red as it is a projection, based on a continuation of five-year cycles, marked on the chart as vertical broken (red) lines.
Each cycle consists approximately of a 1,500 pip move, hence the projection of 1.21(xx) as the next target from 1.36(xx).
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