New Year 2014 Forex Analysis (EURUSD)

Happy New Year! I wish all our readers a grand and awesome 2014! Make sure to start on the right track by checking out Nathan’s article. 

2014_image

With the trading year 2013 behind us and a fresh new playing field in front of us this year, let us take a look at the long-term analysis for the Forex market. As mentioned on the 31st of December, each currency pair will be reviewed separately in this series of long-term analysis. Click here for the 1st part on the USDJPY. Next one is either on Monday or Tuesday.

EURUSD CONSOLIDATION

The EURUSD uptrend ended in summer 2008 and the subsequent consolidation zone has lasted 5.5 years.

The major question is: will the USD start trending?

2- 1- 2014 eu m

The year 2013 certainly saw a couple of good trends in play. The Yen was a big mover in +/- the first 4 months and the last 3 months of 2013. Also the Pound and the Aussie had its fair share of trending movements. Both the Euro and U.S. Dollar were not on that list. They were relative to other currencies in a consolidation mode and the EURUSD therefore was a slow mover, as the key levels confirm (paragraph lower).

Whether the USD or EURO will become a big mover in 2014 certainly depends on the decisions of the ECB and FED. With tapering in sight in the US, this could have a decent chance of significantly strengthening the USD. But this all depends on how much and how fast tapering will be activated.

From a technical point of view, the EURUSD remains in a wedge and wedges usually take longer to wind down than all of us Forex traders can imagine. Price is now at a monthly trend line (magenta) and at a break or bounce spot. Price has been in an uptrend the last 6 months so the question is whether the EURUSD can break and continue to the next point of resistance which is the trend line (purple) and Fibonacci retracement. Or will there be a bigger bounce down to support (green trend line).

EURUSD KEY LEVELS

2- 1- 2014 eu w

A)     2013 open:                1.3196
2013 high:                          1.3890
2013 low:                            1.2746
2013 close:                         1.3757
body of candle:               +561 pips
wick bottom:                    450 pips
wick top:                            133 pips

B)      2012 open:               1.2943
2012 high:                          1.3485
2012 low:                            1.2041
2012 close:                         1.3189
body of candle:               +246 pips
wick bottom:                    902 pips
wick top:                            196 pips

C)      2011 open:               1.3353
2011 high:                          1.4942
2011 low:                            1.2852
2011 close:                         1.2933
body of candle:               -420 pips
wick bottom:                    81 pips
wick top:                            1589 pips

TIME FRAME

I do not believe that the chance of a big USD trend is high for the 1st part of 2014, but there is a decent chance of a trend developing in the 2nd half of 2014. An equally plausible scenario however remains more consolidation. Price ending next year at the same level as it opened up this year would then be a plausible scenario.

USD index:

2- 1- 2014 usd

Did you find this analysis interesting and helpful? What pair would you like to see next? Let us know down below!

We will be back with a monthly / long-term analysis such as this on more currency pairs (such as GBPUSD, AUDUSD, EURJPY, EURAUD) next week. At the end we will summarize the entire market and give the 2014 Forex market expected outline!

Thanks for sharing this article and wish you all Good Trading and a Grand 2014!!!

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  • aw

    this is a very helpfull analysis. thanks