EURUSD Stumbles Following Breach of Channel Support

One week ago we looked at how the EURUSD had become overextended to the upside. At the same time, the single currency was fast approaching the 1.1875 resistance level that I also mentioned in the July 31st commentary.

Buyers made their best effort to keep prices elevated last week, but Friday’s selling pressure proved too strong. At just under 100 pips, the single session loss was the most since May 8th.

While I like to stick to the daily time frame as much as possible, something is happening on the 4-hour chart that caught my attention.

The steep uptrend that’s been in place since July 13th has carved what appears to be a 4-hour ascending channel. If that is indeed the case, Friday’s close broke channel support and today’s price action is testing former support as new resistance.

Of course, whether you consider going short depends on the rules you’ve outlined for yourself. But I will say that the combination of Friday’s break and today’s retest make buying up here riskier than ever.

I’ll maintain the idea that the EURUSD has entered a corrective phase as long as the 1.1875 handle holds on a daily closing basis. And as long as 1.1800/20 holds on a 4-hour closing basis, the downside risk remains elevated.

Want to see how we are trading this setup? Click here to get lifetime access.

EURUSD 4-hour channel

Leave a Comment:

4 comments
Darius says

One thing is interesting that in many other eur pairs eur is rising – eurgbp, euraud, eurnzd

Reply
Lazlo says

Hi, I have been following you for a minute. I would like to know how you get to you resistance and support levels? Is there any specific thing you do because the current support of 1.167 I have as 1.161. Thanks

Reply
    Justin Bennett says

    Nothing other than focusing on the swing highs/lows and pivots in the market.

    For the record, 1.1610 could also be an area of value.

    Reply
ian says

listened to your webinar earlier today and learnt a lot, must admit i was just using m/a but have decided that in the long term price action is better ,now all i have to do is learn it.

Reply
Add Your Reply

114 Shares