The EURUSD has broken below trend line support that extends from the current 2017 low. I mentioned this level last week and also commented on the predicament the pair faced over the weekend.
Today’s 4-hour break isn’t too surprising though considering how the pair was struggling to keep its head above water on Friday. This type of “heavy” price action is something I’ve written about as a sign of a pending reversal.
From here traders can watch for selling opportunities on a retest of the 1.0700/15 area as new resistance. Whether you need to see bearish price action as confirmation depends on your trading style.
However, if sellers have indeed taken control, I’d like to see the 1.0700 handle hold on a 4-hour closing basis. If buyers manage a close back above this area, the bearish bias is negated.
Key support doesn’t come in until 1.0515, which is the 2016 closing price along with several lows from November and December. A close below 1.0515 would expose the multi-year lows near 1.0366.
Note that Mario Draghi is scheduled to speak at 3 am EST, so we could see volatility pick up during this time depending on what he says.
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