Breakout Failure in EUR/USD – What the Chart Analysis Says

Last Updated: 13. November 2023By

Last Friday, the euro rose sharply against the US dollar from 1.0580 to over 1.07 points. One should have expected a new trend phase to continue north. However, this did not happen.

At the start of the new week, the EUR / USD currency pair tried again. Although the rise above the previous day’s high was successful, then profit taking set in.

EUR / USD falls back into the old trend channel Going into the weekend, the currency pair closed at 1.0683 points. As the following graph of the daily chart from the end of November 2022 shows, the currency pair slipped back into the old trend channel (blue). Thus, the upward movement turned out to be a classic false breakout to the top.

In the graph, although the red downward trend was broken and thus a buy signal was generated, there is a lack of momentum and new purchases that will drive the currency pair up to the blue 200-day line just over 1.08.

Figure 1: Chart analysis of the euro to the US dollar. The daily chart is displayed.


The battle between the bulls and the bears continues A stalemate in which neither the bulls nor the bears have the upper hand. Nice trends look different.

Usually after a false breakout there is a similar movement in the opposite direction. In this case, the currency pair would have to drop to just under 1.05. Chart technically, the lower, blue support line would then be breached. Overall, however, the currency pair would only target the lows of the previous week once again.

I assume that the currency pair will fall to a maximum of the gray 50-day line at 1.06. This moving average serves as real-time support.

Short-term, seasonality shows downward for next week At least this direction of movement is statistically supported. The seasonality shown in the figure below shows downward until November 20th. Only then is there a probability that the euro will gain strength against the US dollar.

Figure 2: Seasonality of the euro to the US dollar for the next 20 days is displayed.

Source: Bopp Capital Market Studies

57% chance of EUR / USD price drop for the upcoming calendar week The statistical evaluation of the last 44 years has shown that from Monday to Friday next week, the chances of a price drop are 57%. The movement is promised a strength between 0.2 and 0.7% – that corresponds to just under 70 pips south and would fit my assessment of a price drop towards 1.06.

Conclusion: The possible new bull market in the euro to the US dollar is currently stalling. A decline to the area around 1.06 points is likely this week. Overall, however, the sideways phase of the euro to the US dollar is not yet over.