Yesterday’s session confirmed what we have suspected since early September – that the EURUSD was topping. It’s been a topic of discussion since the September 8 bearish pin bar from 1.2040 resistance.
Then came the combination of factors that suggested an imminent move lower. The September 25 close below ascending channel support sealed the deal and opened the door to 1.1670 support.
All of those scenarios were merely a precursor to yesterday’s breakdown. I mentioned it last Friday and again in the most recent weekly forecast how sellers needed to secure a close below 1.1670 to open up downside targets.
But the more significant impact of yesterday’s sub 1.1670 close was the confirmation of a three-month head and shoulders pattern. The formation gives me a reason to believe the pair is heading toward 1.1300 and perhaps even lower.
In fact, 1.1300 was my initial target for the pair when I went short on September 8. I mentioned this in the member’s area, though I ended up booking profit at 1.1670 and re-entered short just below 1.1875.
From a technical standpoint, no other currency pair comes close to matching the EURUSD right now. That’s saying a lot considering there’s no shortage of attractive charts for me to choose from for this weekend’s forecast.
If you aren’t already short from the 1.1875 retest, you may want to hold off for now. The pair is quite overextended at the moment so there’s a decent chance we’ll see a rotation higher into 1.1670 resistance next week.
The next key support comes in at 1.1490. And if the price action throughout 2017 is any hint, we could very well see a bounce from this area back to 1.1670. Of course, there’s always the chance that U.S. dollar bulls don’t stop for a breather until 1.1300.
Regardless of what occurs within the present range, as long as 1.1670 holds as resistance on a daily closing basis (5 pm EST), my target will remain 1.1300. If buyers manage to retake the 1.1670 handle, it would signal a false break and re-expose 1.1875 resistance.
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