EURUSD consolidates below 1.108 early in the London session. Traders and investors are becoming nervous about the US-China trade deal.
November 19, 2019 | AtoZ Markets – EURUSD extended gains to 1.109 on Monday after slightly breaking above the 1.107 resistance level. There was no high-impact news in the economic calendar on Monday. The market, therefore, maintained the bullish sentiment that started in the latter part of last week. However, the rally has paused and EURUSD consolidates below 1.108 (around the 1.107 critical area) which will give the bears something to ponder. The long term trend remains bearish, medium-term bullish and the short term from 1.1108 is bearish. On the intraday level, the market started a minor surge from 1.099. EURUSD is, therefore, a currency pair for all types of traders at the moment.
US-China trade conflict dominates headlines
The US-China trade deal remains a major concern. Investors are wary of another breakdown in talks despite positive comments from Washington and Beijing. The war is more than a geopolitical battle. Rather, it’s a power fight between the two world’s largest economies. Many analysts believe that even if the first phase of the deal is successful, the war is far from over.
Meanwhile, there were contradicting reports early in the week. Reports in Beijing suggests that Chinese officials are doubtful of reaching a complete trade deal soon although the first phase might pass through. Investors are nervous about this report and might turn on risk aversion. This will, in turn, increase the demand for USD and other ”safety assets”. EURUSD, therefore, might continue the long-term bearish trend especially if the current surge is resisted below 1.115.
EURUSD Elliott wave analysis
Technically, the current surge might not last much longer. The long term bearish trend from 1.255 is probably not yet over. In the last update, we looked at the long and short term EURUSD Elliott wave analysis. The chart below shows how the bearish impulse wave has been emerging since February 2018 ( The charting tools used below are from TradingView)
The 5th wave of the long term bearish impulse wave is becoming extended and emerging into an ending diagonal pattern as well. Wave (iv) of the diagonal ended at 1.118 with a double top reversal pattern. The price has retraced to the neckline of the pattern which is now a critical level from an intraday degree.
The correction from 1.099 is currently around a strong resistance zone. We will have to see how the market reacts to this level. If a proper break below the wave b trendline happens, the bears might push lower below 1.099. However, if a sudden surge above 1.11 happens, we should see higher prices above 1.11. Overall, 1.118 should remain unbreached if the long-term bearish trend will continue.