The EURUSD trade sequence has been the same for traders for a month now.
EURUSD stays in the red box.
There are extremes defined by the 1.2360 on the downside, and 1.2576 on the topside ( I will ignore the high at 1.25989 – this is the Blue Box).
In between, there are sellers at the 1.2500-1.2508 area and buyers at the 1.2393-977 area (this is the Red Box). The trade sequence is like a recurring dream. It goes higher. It goes lower. When you think it might break lower, it bounces higher. When you think it might go higher, it stops and moves back lower. It was only yesterday we were at the high area at the 1.2500-1.2508 area. The price went lower.
So with the price just moving down to a low of 1.2398, I cannot be too surprised to see buyers at the level – on the first test. Is there a chance for a further break, i.e., maybe to the bottom of the Blue Box at 1.23607? Sure, but…..
Like the previous post, Forex Technical Analysis: EURUSD tests a familiar trend line in early NY trading,the but is “if the momentum can be maintained and the technicals remain bearish”
For this to happen, it would be nice to see the corrections, hold against broken resistance levels above.
The first is the trend line that held support yesterday and initially held support today (see Red circles). That level comes in at the 1.2411 . Stay below and a move through 1.2393 is not asking a lot.
If you want to give a little more room, the upward sloping trend line starting at blue circle 4 in the chart above, has 1.2425 as the underside of that broken trend line.
Putting it bluntly, if the sellers want to see this pair get out of this range, move away from the 100 and 200 hour MA and make a further end of year push lower, the 1.2425 level should not be broken.
Where can the EURUSD go, if the bears take the bulls by the horn and wrestle this market lower? A move below the low for the year at the 1.23607 will next target the 1.2329 low from 2008. Then comes the trend line off the lows from 2010 and 2012 at 1.2222. Finally, the 50% of the move up from 2000 low in the EURUSD to the high in 2008 comes in at 1.2131. This would be a nice target for December.
Can this dream end, with a different ending? Let the price action lead the way.
The targets on break include 1.2329, 1.2222 and 1.2131.
