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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
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In Wednesday’s EURAUD commentary, I remarked at how the Euro was hanging by a thread against the U.S. dollar. The 230 pip single session drop on June 14 put sellers back in control, but Euro bulls have battled back this week.
Here’s why…
There is a trend line that extends from the 2017 low at 1.0340. That level connects with the April 2017 low and was responsible for the May 30th bounce just last month.
You can also see how the last five sessions have benefited from this 2017 trend line. Buyers were back at it again today, but they’re headed for a resistance level at 1.1720 that could pose some problems next week.
I wouldn’t be surprised to see the pair struggle at 1.1720 given last week’s impulsive selloff. Moves like the one last Thursday tend to leave a lasting impression which means the EURUSD could have a difficult time trying to claw back recent losses.
However, I won’t entertain a short here until the 2017 trend line breaks on a daily closing basis. Only a close below it at 5 pm EST (New York close chart) would pique my interest. I’ll continue to be a spectator until then.
A break lower would expose several key support levels including the November 2016 high at 1.1290 followed by 1.1125. Alternatively, a move higher from current levels would likely encounter selling pressure at 1.1720 followed by 1.1830.
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