By Gabriel Ojimadu, Alpari
On Thursday the 9th of November, trading on the euro/dollar pair closed up. The trend line was broken through as I expected. After breaking the resistance zone around 1.1606, the euro jumped to 1.1655. The US dollar came under pressure from the fact that the new tax reform legislation proposed by the Senate includes deferring a corporate tax break until 2019.
The House Ways and Means Committee of the House of Representatives approved the tax bill. Now it will be put to the House floor for discussion. Both houses of Congress will have to agree on a final version before it gets sent to the president to be signed into law.
Day’s news (GMT+3):
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- 12:30 UK: industrial production (Sep), manufacturing production (Sep), trade balance (Sep).
- 18:00 USA: Michigan consumer sentiment index (Nov).
- 21:00 USA: Baker Hughes US oil rig count.
Fig 1. EURUSD rate on the hourly. Source: TradingView
The 45th and 67th degree were broken through on Thursday. Closer to closing time, during trading in Chicago, the price jumped to 1.1655. I reckon that we should make one more high, after which we can consider shorting the euro. We can forget about the head and shoulders pattern as there is no corresponding wave structure.
We have the A-A channel. I formed it by connecting the minima 1.1675 (27/10/17) and 1.1554 (07/11/17), and imposed a parallel line running through the maximum 1.1690 (03/11/17). The upper boundary runs through 1.1675. I think that if the price doesn’t reach this level, we’ll get a reversal.
Since trading volume has been low over the last 12 hours, the price could dip to 1.1635 before reaching a new high. Since this Friday is relatively devoid of news releases, I’m expecting trading on the euro/dollar pair to close around the trend line at 1.1620.