What’s it going to take for the EURUSD to break free from consolidation?
Also, how might the recent price action trigger a more aggressive breakout?
Watch the video below to find out.
Be sure to also scroll down for more commentary and an annotated chart.
The EURUSD is just above a significant support level at 1.1075.
This is the intersection of ascending channel support that extends from the 2019 low and a horizontal level that has been a factor since last August.
It’s also one of two areas that could trigger a breakout.
I wrote about how the EURUSD needs to break free from this terminal pattern to establish itself.
In other words, the consolidation is likely to continue between 1.1075 and 1.1180.
While that might not sound too exciting for some, just remember that longer periods of consolidation tend to trigger more aggressive breakouts.
And just as I wrote on December 27th, that breakout could go either way.
There’s no denying that the EURUSD has been trending lower since 2018.
In fact, the pair has lost ground via a series of lower highs and lower lows since mid-2008.
So the intermediate and long-term trends are pointed lower here.
But then again, no trend lasts forever.
And even the most established downtrends have occasional rallies that we can’t ignore; the EURUSD is no exception.
As such, it’s essential to stay flexible and respect either outcome.
A daily close below the 1.1075 area would signal weakness and expose the next key support at 1.0990.
On the other hand, a daily close above the 1.1180 region would suggest strength and open the door to the area between 1.1280 and 1.1300.