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Over the weekend we discussed how the EURUSD would likely find selling pressure at 1.2325. As the low of the 2008 financial crisis, it makes sense that offers would build up here.
As it turns out, Wednesday’s session carved a high of 1.2323, just two pips below our key level. Not only did the pair find sellers in the area, but it also erased all gains for the week.
Additionally, Wednesday closed back inside the ascending channel that extends from the November 2017 low. Although the EURUSD didn’t react to this upper boundary last week, the pair did find support here before breaking below it on Wednesday.
With prices now back below the level on a daily closing basis, all eyes turn to 1.2145 followed by 1.2070. A close below that would open up the confluence of support at 1.1930.
I suspect sellers will want to defend the 1.2200 area going forward. It’s going to take a daily close (New York 5 pm EST) back above it to re-establish last week’s rally.
In summary, the longer-term uptrend is intact, but Wednesday’s close suggests near-term weakness in the single currency.
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Take the upper trend line back to the high of October (Oct. 12th) and you’ll find the price turns at that point instead of punching through the trend line. That’s what I hate about trend lines – they are too subjective.
Take a look at how the pair reacted to the upper level I’ve drawn on the 1-hour and 4-hour time frames. You’ll see why I took the time to post this.
Thanks for your reply, Justin. Would you stick with the trend line you have, or readjust it for future analysis to include all the candles?
Tks for the setup and if you want to trade this setup, do you prefer enter the 50% retracement or will enter on 1.22000 ?
That’s good Justin. The pair was capped too in the Weekly Chart by its Resistance from July 2008.
I’ll wait till the week close. No hurry….. 😎
I think you mean October 2008, which is what I mentioned in the post.
Haha Justin, yours is the Horizontal level while mine is the Long term falling trend line where both of them met is the Confluence of Resistance.
Am I right?
It could be a long term top as well. If you draw a trend line from 2008 high thru 2011 high it meets exactly at 1.23 where it has produced a bearish signal.
hi justin..talking about pinbar….should we use the same method like the daily timeframe pinbar on weekly timeframe pinbar…thank you
Sure, you can.