On Tuesday we looked at how the EURUSD had closed back below the 1.1875 handle. It came after both the November 24th and 27th sessions had closed above it.
Even today, last week’s break above 1.1875 appears to have been false. While it is true that the Euro is trading above the level as I type this, we haven’t had a daily close above it since Monday.
One thing I also mentioned in that commentary is the nearby trend line support at 1.1810/15. Today’s low so far is 1.1808, and that’s no coincidence.
Notice how the single currency caught a bid right where we’d expect. The trend line that extends from the November low is very much in play and is one worth keeping an eye on.
From here it’s all about the daily close at 5 pm EST. As long as the pair remains below 1.1875 into the close, there’s a high chance of a move lower.
However, I don’t need to tell you that the EURUSD is running out of real estate. Market participants are going to be forced into a decision within the next day or two.
A 4-hour or daily close below trend line support near 1.1830/40 would expose the 1.1670 handle. A daily close below that would target the November low at 1.1553 followed by 1.1490.
Alternatively, a daily close back above 1.1875 would put the focus back on 1.1960 followed by 1.2040. The latter was responsible for the September 8 bearish pin bar that kicked off the two-month pullback.
Just be careful here. If a market begins to ignore a level that it respected previously, it may not be worth considering at all. That tends to occur more frequently in low liquidity environments like that of late November and December.
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