Despite having gained more than 400 pips so far in 2017, the EURUSD looks ready to resume the broader downtrend. The pair has closed back below the key 1.0715 handle ahead of the US fourth-quarter GDP.
Over the weekend I mentioned how this area would likely act as a pivot for the pair. A close above it would expose higher prices while bearish price action on a retest of the level would offer a short opportunity.
While we didn’t get a bearish candlestick pattern per se, yesterday’s session failed to hold above 1.0715. This breakdown comes after the single currency had held above the area for three straight sessions.
From here I’ll look for this area to serve as resistance on a daily closing basis. However, there is another way to approach the EURUSD via the 4-hour pattern you see in the chart below.
A close below wedge support would open up downside targets. And while you won’t be able to sell as high compared to shorting a retest of 1.0715, this approach adds another layer of conviction to the trade idea.
Furthermore, waiting for a close below this trend line would likely help you avoid entering in front of the upcoming event risk. At 8:30 am EST we have the US fourth-quarter GDP along with core durable goods orders, both of which are expected to move the needle for the US dollar.
As for downside targets, the first key support comes in at 1.0515. This is the 2016 closing price as well as several lows from November and December of last year. A close below that would expose the multi-year lows near 1.0366.
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