FX.co ★ Trading Plan for EUR/USD and US Dollar Index for January 18, 2018

Technical outlook:

The EURUSD daily chart setup has been presented here to have a bigger picture. The pair seems to have either completed an impulse after its rally began from Jan 2017, or it is in the last leg within the 5th wave as labeled here. In either case, a drop is expected towards at least 1.1900 levels, which could be wave 4 termination point within the last wave (5). Furthermore, if EURUSD breaks below the immediate support trend line, it would indicate that a meaningful top is in place at 1.2323 levels and that the pair should be heading lower towards 1.1500 levels. Also, note that the 1.1500 levels are right at the Fibonacci 0.382 support of the entire rally between 1.0350 through 1.2323 levels in the past one year. Bias, for now, remains on the short side.

Trading plan:

Remain short with the stop above 1.2323, target 1.1950/00 at least.

US Dollar Index chart setups:

Technical outlook:

The US Dollar Index daily chart view has been presented today with probable wave counts, to have a bigger picture. The index looks to have produced an impulse (5 waves) lower since January 2017 from 103.80 through 90.20 levels respectively. As an alternative though, it could be possible that the last wave (5) is yet not complete and may push lower one last time after producing wave 4 of one lesser degree. In either case, the highest probable wave count is a rally through 92.70/93.00 levels at least. Furthermore, a push higher would test 95.14 resistance before producing a meaningful pullback. Please note that over the next several weeks or months, the potential remains for an extended rally towards 98.50 levels. The bias remains on the long side for now.

Trading plan:

Remain on the long side, stop at 90.00, target 92.70 at least.

Fundamental outlook:

Watch out for CNY GDP figures around 0200 AM EST.

Good luck!