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Chart of the Day: EURUSD (monthly)

We closed out the month of October with EURUSD gaining 2%, although this was dwarfed by the 5% rally in GBPUSD as a no-deal Brexit was priced out. With EURUSD closing at 1.1152, we saw price print and complete a bullish key monthly reversal off the 76.4% retracement of the 2016-2018 rally.

EURUSD (monthly) chart
EURUSD (monthly)
"EURUSD (monthly)"

We closed out the month of October with EURUSD gaining 2%, although this was dwarfed by the 5% rally in GBPUSD as a no-deal Brexit was priced out. With EURUSD closing at 1.1152, we saw price print and complete a bullish key monthly reversal off the 76.4% retracement of the 2016-2018 rally.

Of course, we need to see a higher high this month and a break-through trend resistance. However, this type of price action has a history of offering lasting follow-through moves and should be respected. For example, in November 2017, while initially, we saw the sellers push the price into 1.1715, we saw the bulls dominate and push a higher high, with price trading over 550 pips higher in the next two months into 1.2558. Go back to April 2013 to February 2014 and we saw three bullish monthly reversals (price trades below the prior months low to close above the high), and all three-saw follow-through buying in the months ahead.

In fact, if we go back to the inception of the single currency in 1999, there have been 10 bullish reversals play out and they generally all been an excellent pre-cursor for further upside in the months ahead.

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