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Wave Analysis for EUR/USD in December: Trading Not Recommended
November definitely showed that the prospects for the EUR/USD pair are extremely poor. This is primarily due to divergences in monetary policies of the ECB and the Fed. So far, these divergences are more verbal, but they have good chances of materializing in December. Although the market has largely factored in the Fed’s rate hike in December and the ECB’s monetary policy easing, a downward move, associated with confirmation of concerns, may be enough to reach parity.
Despite the clear dominance of downward pressure, we believe that the prospects for further decline are limited. This is largely due to the fact that soon the market focus will shift to further actions of the ECB and the Fed, which are not as clear and straightforward as December.
This seems to be reflected in the wave analysis, since its results indicate a lack of a clear picture of the near future.
Only elements of short-term cycles remain. Long- and medium-term cycles are currently absent.
The aggregated cycle picture is presented in the table below:
From a trading perspective, medium-term trading with the euro/dollar pair is not recommended due to strong dependence of the asset on the results of the meetings of leading central banks in December, which will determine the new configuration of forces on the market.
Wave Analysis for GBP/USD in December: Movement in the Shadow of the Dollar
The pound moved in the wake of the dollar in November. It had no internal reasons for growth, nor any special reasons for falling. The main intrigue around the pound is the possible tightening of the Bank of England’s monetary policy. However, it should be noted that even verbal interventions from official figures have not yet occurred. Everything happens in the minds of analysts and traders. So, movement in the shadow of the dollar is likely to continue in December.
Technically, the pound looks quite sellable, although it should be noted that it is clearly in the lower range of the global range, so the potential for further decline is largely limited.
From the wave analysis perspective, there is a clear division of the picture into long-term and short-term. If the first clearly speaks in favor of buying the GBP/USD pair, the second, on the contrary, indicates selling. Despite the opposite signals generated, they are, in our view, justified and generally fit within the movement of the pair within the global range of 1.46-1.58 (the boundaries are approximate).
A more detailed picture of signals, directions, and targets is presented in the table below:
So, the short-term wave picture for the pound suggests selling GBP/USD. The long-term upward trend remains relevant, so if you are ready to hold a position for several months, you can certainly start gradually increasing your longs on the pair.
Wave Analysis for USD/JPY in December: Strong Buy Signals
The main event for the USD/JPY pair in November was the breakout of the level 121.50. This automatically activated the upward trends. However, it should be noted that the pair did not particularly develop the success (or could not). Much of this is due to the strength of the Japanese economy, which fell into a recession by the end of the third quarter, and the strength of the yen itself, related to its status as a reserve currency.
The world is very unstable now, and the demand for the yen is high, preventing the dollar/yen pair from rising to the 125.50 area, which should have been the first target of the breakout of 121.50.
Regarding the results of the wave analysis, it generally confirms what was said above.
- Taking 121.50 led to the formation of relatively stable buy signals.
- The long-term upward cycle for the pair is at the end of the fifth impulse wave and has essentially exhausted itself.
- The medium-term cycle generates buy signals with good potential for realization (we are still in the third wave area).
- The short-term picture generally speaks in favor of buying, although the growth potential is limited.
The current aggregated cycle picture is presented in the table below:
FAQ
Why is EUR/USD not recommended for trading in December?
The EUR/USD pair lacks clear prospects due to uncertain central bank policies and limited potential for further decline.
What is the outlook for GBP/USD in December?
Short-term signals suggest selling GBP/USD, but long-term trends remain positive within a defined range.
Why is USD/JPY considered a strong buy?
USD/JPY has formed stable buy signals, with medium-term cycles showing good potential for growth.
