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On Sunday I discussed a potential support area for the EURUSD.
The descending channel that began developing earlier this year is triggering a bounce so far this week.
While it’s still early to think about buying the euro, I do believe the price action over the last twelve months could surprise a lot of traders later this year.
As I pointed out last week, the upper portion of the channel in the second chart below is actually part of a much larger level.
Here’s an extended view of the daily time frame:
Now, some of you disagree that this is a falling wedge pattern.
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And that’s fine. In a business as subjective as trading, I don’t expect everyone to agree with me.
In fact, I prefer it that way.
Some of the best trades of my career have come from contrarian views.
It will be interesting to see whether or not the EURUSD can challenge the 1.1340/50 resistance area this month.
If so, it would technically be the fourth retest of resistance since its inception last April.
So what’s the game plan?
I won’t be interested in buying EURUSD until the pair can clear falling wedge resistance near 1.1340/50.
A level this significant will take a daily close above it to confirm the breakout.
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Until then, the EURUSD downtrend is intact.
However, I’m still not a fan of shorting the single currency down here.
If this is a falling wedge, it means the pair only has a few more months before buyers and sellers will be forced to make a decision.
That could be next month or even next week.
The last thing I want to do is short a market that’s nearing the end of a terminal pattern with bullish implications.
That’s what we’re facing here. Or at least that’s my interpretation of the situation.
So for now, I’ll wait.
I’m not in a hurry considering the clear skies that lie above wedge resistance.
Keep in mind too that this does not mean the EURUSD can’t carve a new 2019 low.
As long as 1.1340/50 is intact on a daily closing basis, the pair will be susceptible to selling pressure.
But if 1.1340/50 breaks, euro bears will be forced to reevaluate their outlook.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.
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