Today I’m going to show you exactly how I’m trading the EURUSD following Tuesday’s correction.
I’ll discuss whether or not Monday’s rally was a fakeout, and what that could mean for the euro as we head into November.
I’ll also provide an update on the US Dollar Index, the DXY.
Watch the video below and scroll down for the annotated charts and analysis.
EURUSD is pulling back sharply today after closing Monday above the 1.0635 critical level.
The DXY 105.60 level that I’ve discussed for weeks is what kept me away from buying the euro during today’s pullback.
I’ve discussed the significance of 105.60 for the dollar index at length in recent weeks and even months.
As long as the DXY is above that mark on the higher time frames, I favor dollar longs.
As for EURUSD, a sustained break back below 1.0635 this week would imply a failed breakout on Monday.
Failed breakouts tend to trigger extended moves in the opposite direction.
We’ll see if that’s the case here with EURUSD, or if bulls can push past the 1.0635 region.
However, despite today’s price action, the euro remains range-bound and ultimately difficult to trade, given the lack of momentum.
For that reason, I think traders need to be careful here.
Caution and limited position sizes seem warranted until EURUSD can break the current range.
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