While the euro was off to a pretty good start for 2014, it was all “Geronimo!” for the rest of the year as EUR/USD went on a 1600-pip slide. Were you able to catch any of these short opportunities?
1. Double top completion and near test of 1.4000
Early in the year, EUR/USD made a couple of failed attempts to break past the 1.3950 minor psychological forex resistance and even came close to testing the 1.4000 mark. Once the double top pattern was completed, it was all downhill for the pair for the rest of the year. Anybody catch the move from the very top?
2. Talk of negative deposit rates in early Q2
Towards the end of March and the start of Q2, talks of negative deposit rates from the ECB started to weigh on the shared currency as deflationary concerns popped up. ECB officials even showed support for this policy move, leading to a neckline break of the double top pattern shown earlier.
3. First set of ECB rate cuts in June
ECB Governor Draghi and his men finally pulled the trigger on monetary policy stimulus in June by announcing a set of interest rate cuts. He also announced new sets of targeted LTRO and dropped hints on purchases of asset-backed securities, putting more selling pressure on the euro. A pullback took place days after the announcement though, leading to a better short entry point at 1.3700 in July.
4. Second set of ECB rate cuts in Sept
The next set of ECB rate cuts announced in September turned out to be a bigger shock for the euro, as EUR/USD made a bigger reaction then. Although Draghi already gave some clues during his testimonies in the previous months, many were still taken by surprise when the ECB head unveiled more aggressive stimulus efforts.
5. Break-and-retest of yearly lows
EUR/USD had another leg lower following the September rate cut announcement, even leading to a break of the yearly lows around the 1.2800 handle. After dipping to support at the 1.2500 area, the pair made a neat pullback to the broken long-term support at 1.2800 before heading back down and creating newer lows.
As they say, a picture paints a thousand words so I’ve summed all these up in one neat chart right here:
At which point were you able to hop in this EUR/USD dive for 2014? Or did you play other euro pairs instead? Don’t be shy to share your experiences in our comments section!