Wednesday, December 7, 2022

EUR/USD Short Squeeze Imminent? |


There hasn’t been much to get excited over in FX over the past couple of days, but with vaccine optimism still the more dominant theme, the US dollar continues to be sold.

If the trend continues, the is a candidate to look for long opportunities on, given that most people are bearish on it (because of the pandemic and the fact ECB will almost certainly expand QE in December). There is still plenty of time until the ECB’s meeting and I think we might see a short-squeeze rally before we see a potential drop.

Have a look at this EUR/USD daily chart, with some added annotations on it:

EUR/USD Daily Chart

Read the analysis points in the order they are written—from point 1 to point 6— in order to understand what I am seeing (i.e. a possible short squeeze rally). If we get a nice bullish candle today, Friday could see the onset of a short-squeeze rally on EUR/USD.

By the way, if you want to understand more about false break reversal pattern I have mentioned in the above chart, you may want to watch this quick video I had made on the subject previously:

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