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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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The EURUSD has been relatively idle so far this week. As I type this, the single currency is hovering just 20 pips above last week’s close.
However, despite the lack of movement, the pair is holding below a key level I’ve pointed out a couple of times recently.
On August 2nd, EURUSD sellers cleared wedge support that extends from the June 21st low. I mentioned the probable breakdown just hours before the session closed below support at 1.1605.
Then on Friday, buyers decided to test the former support level as new resistance. After carving a session high of 1.1610, sellers closed the EURUSD lower at 1.1566 ahead of the weekend.
Fast forward to the last 24 hours, and you can see where the pair is once again challenging previous support, this time at 1.1620. Yesterday’s session held below the level and buyers are struggling so far today.
Now, on the one hand, these retests of wedge support turned resistance could be viewed as selling opportunities. And as long as the EURUSD remains below this 1.1620 area on a daily closing basis (New York 5 pm EST), the pair is vulnerable in my opinion.
That said, it’s important to put some context around last week’s breakdown. While Thursday’s close was the catalyst for some additional selling pressure, the ten-week 320 pip range between 1.1510 support and 1.1830 resistance is still intact.
With that in mind, this week’s sideways movement isn’t surprising in the least. I am still tentatively bearish here, but I won’t be willing to step up that bias until sellers can clear range support at 1.1510.
If they do, the 340 pip height of the wedge suggests the Euro may not encounter much demand until the 1.1300 handle. Alternatively, a daily close back inside this wedge pattern would delay that outlook and re-expose wedge resistance near 1.1700.
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