The euro faces a significant test at key resistance. But this needs to happen to confirm a change in trend.
Watch today’s video for a simple way to confirm trend changes. You’ll also learn how to make sense of trends on different time frames.
EURUSD confirmed a change in structure overnight with its first higher low since October 29th.
I mentioned this to members in the VIP Discord group, noting that pullbacks were for buying.
Not only did the euro test its November open at 1.1528 on Thursday, but it’s also extending into the October 31st inefficiencies. I’ve noted these two levels near 1.1550 in recent videos.
Markets often revisit thinly traded areas due to the simple nature of markets, which is to “activate” as much liquidity as possible.
Now, let’s discuss the topic of trends and the EURUSD 1.1555 resistance area.
With the pair approaching the area on Thursday, sellers are likely to come out in force.
However, entering blindly is always risky, no matter how significant a key level appears.
A better way is to wait for confirmation. Specifically, a change in the intraday structure has occurred, which for EURUSD has been characterized by higher highs and lows since November 5th.
If EURUSD thoroughly tests 1.1555 resistance, I’ll watch how the price reacts. If the euro takes out its last swing low (currently near the November open) with conviction, I’ll look for shorts against the area.
On the other hand, if EURUSD secures a high time frame close above 1.1555, we could be looking at a push into the 1.1660 region.
Overall, the EURUSD remains in a downtrend. That’s been the case since September 16th, and Thursday’s rally hasn’t changed that.
However, at the same time, I don’t have enough information to open a short position without seeing the euro test 1.1555 and taking out its last intraday swing low with conviction.
As for the DXY, the index is sweeping its November open at 99.75 on Thursday. The level has held as key support all week.
What happens at 99.75 will offer clues about pairs like EURUSD. A sweep of 99.75, combined with a bullish reclaim and a change in structure, would help confirm a EURUSD short.
On the other hand, a sustained break of 99.75 without a convincing reclaim exposes those inefficiencies at 99.30. This aligns with the EURUSD in the 1.1600 region.
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