EURUSD has surrendered to the selling pressure it discovered during yesterday’s session after testing the waters above 1.1450. Although it didn’t quite make it to the October 2015 highs I mentioned over the weekend, the selling that persisted throughout the session was a sign of things to come.
In the weekend commentary, I also asked the question – is the pair running out of buyers at current prices or is this a corrective move before the next leg higher?
It seems the latest 4-hour close below the February and March highs has provided us with an answer. While a daily close below the level would add conviction to any short setup, the intraday break is an indicator that things are likely to get worse before they get better.
Although the current uptrend is technically still intact above 1.1140, today’s intraday break is significant considering the amount of time the pair had held the line at 1.1340 since closing above it on March 31st.
The next support level comes in at the March 10th ECB high of 1.1210. This area had also acted as a key pivot between June and August of last year.
My game plan from here is quite simple. If the pair closes the day below 1.1340, I’ll begin watching for a retest of the level as new resistance. Renewed selling pressure from there could trigger a move toward the 1.1210 handle.
Alternatively, a close above the level would turn our attention back to the 1.1450 resistance area.
