The EURUSD selloff is continuing this week with no end in sight.
It all started with the close below ascending channel support on January 23rd.
We had anticipated a break from that terminal pattern for weeks.
The EURUSD reached our first target at 1.0990 on January 29th.
That aggressive bounce from 1.0990 turned out to be a bull trap.
It was also largely the result of it being a Friday and, more importantly, the last trading day of January.
Then came the break below 1.0990, which I wrote about here.
It didn’t take long for the EURUSD to reach the next two support levels at 1.0940 and 1.0900.
So where to from here?
This is where the broader descending channel comes into play.
Remember that one?
It’s the same channel I wrote about on November 5th and again on December 13th.
In the January 18th Forex Forecast video, I even stated that EURUSD could trend lower to close the April 2017 French elections gap at 1.0724.
Here’s the video:
As of now, a move to close the gap at 1.0724 seems likely.
The only thing that would delay that, at least for me, is a daily close back above 1.0900, which should now serve as resistance.
Keep in mind, however, that the EURUSD could also encounter buyers near 1.0825.
You can see how this level was influential during the first half of 2017.
Other than that, be sure to keep an eye on the larger descending channel that extends from the August 2018 low.
If the EURUSD stays on its current trajectory, the bottom of that channel could become a factor before 1.0724 is realized.
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