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Forex pairs in this Article » EUR/USD (Bali) - The near term EUR/USD outlook remains positive, with David Solin, Partner at FXA, expecting the exchange rate to continue rising into year-end.

Solin foresees a Euro threatening Oct high at 1.3830 and beyond, noting lots of positives still seen. As the Analyst writes, "technicals remain bullish, the seasonal chart is higher into the end of the year, the 3 wave fall from the Oct high (a-b-c) argues a correction, and the often mentioned tendency for fx markets to grind in the direction of their larger trend during Dec (higher in this case) all support the view of another few weeks of upside ahead."

Once/if the EUR/USD reaches 1.3830, Solin expects offers near by to slow down gains. The Analyst contemplates two possible scenarios from there, one being that "gains may be limited and part of a larger topping" versus "the start of a more major, new upleg"

The technical reasons leading Solin to be more cautious above 1.3830 are explained below:

"Note that the market may be forming a rising wedge-like pattern since the Jul 2012 low at 1.2045, generally seen as a reversal pattern that resolves lower. These patterns break down to 5 legs, with another push above the Oct 1.3830 high seen as that final leg (wave 5). Additionally, lots of longer term resistance lies just above the 1.3830 high at 1.3865/1.3925 (both the rising trendline from Feb/ceiling of the possible wedge, and the bearish trendline from July 2008), an "ideal" area to form a more important top."

Meanwhile, supporting a mid/long term long play, Solin mentioned the following:

"Markets will at times resolve sharply higher from these wedge-like patterns (eur/yen Nov upside resolution of wedge since May for example). Though not favored, there is always the potential. So in this case, would keep an extra eye on the "timing" (gains/upside pressure into end of the year, longer market goes past that time without resolving higher, the even less likely such an upside resolution becomes) in addition to the price level ahead."

Solin's strategy remains short term bullish, however, as he notes, "will be looking for signs of a more important topping (upside capped by ceiling of wedge) into the end of the year."
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