EURUSD along with other currency pairs experienced a volatile week with Britain having the brexit referendum polls on 23rd. Obviously the brexit also concerning the Euro zone had a huge say in EUR rates. Building up to the event, there was a gap at the Monday open of 58 pips, where the Friday close was 1.12737 and Monday open was 1.13317.
Although not on the same day, the market went on to close the gap which usually is the case when there are price gaps on Monday open. But this was rather an unexpected jump of price with uncertainty and fear building around both EUR and GBP. Nevertheless, Monday was an indecisive day with regard to price. Hence the market saw a rally followed by a decline. This decline carried on to Tuesday as well, also closing the price gap of Monday. So the market saw off Monday and Tuesday with no major levels reached or breached.
Building up to the Thursday’s Brexit polls EURUSD rallied again to reach the 1.14160 level and marked the week high at 1.14278
Then the prices collapsed as expected with the release of Brexit poll results by about 580 pips. On Friday the price did recover around 1/3 of Thirsday’s decline. None the less, the week saw the highest decline of EURUSD since November 2015.
An eventful week with so much uncertainty. It was a decisive moment not only for financial markets, but for Europeans in general. However, now Britain has made a choice that they will have to live with exclusion from the EU, for generations to come perhaps.
Expectation for next week
Please refer to the “EURUSD Triangle forecast” section in EURUSD What next? Analysis and forecast.
Nothing will change much overnight. The Brexit referendum may have marked a decisive moment for EUR but its implications will take a considerable amount of time to manifest in charts. The market is a huge cumbersome beast. It takes time and plenty of back and forth price movement to move from one price-point to another.
Major events calendar:
Spanish Parliamentary Election
Final GDP q/q
CB Consumer Confidence
Crude Oil Inventories
ISM Manufacturing PMI
Upcoming week is comparatively quiet with regard to news events. However, news events and economic data releases of other major currencies and commodities could affect prices, especially GBP news – because of last week’s brexit polls.
Medium to long term expectation is still the D wave of a triangle pattern.
Short term forecast
Short term expectation is bearish and awaiting end of correction to continue the impulse wave to the downside. That is the C wave of ABC forecast within the D wave of the triangle.
Here is a closer look…
So the week ahead looks bearish for the EURUSD in terms of technical analysis.