After more back and forth price action this week, sellers have managed to punch a hole in the 1.1430 support area on an intraday basis.
I first mentioned the 1.1410/30 support area on October 7th. Just two days later, EURUSD reached a session low of 1.1432 before bouncing 55 pips into the close. That was a pretty clear indication that the area was on the radar of market participants.
We then saw the level serve as support during the October 19th session. Buyers took advantage of the rebound and managed to push prices higher by more than 100 pips.
However, that 1.1530 resistance level I mentioned last Sunday has stunted this week’s rally. And with EURUSD now trading below the 1.1430 handle, it opens up a new 130-pip range between 1.1430 and the year-to-date low of 1.1300.
So far, the euro has cleared 1.1430 on a 4-hour closing basis. That may be enough to begin watching for a selling opportunity following a retest of the area as new resistance.
But if you’re an end-of-day trader like me, you will want to see a daily close (using a New York close chart) below 1.1430. In other words, everything that occurs before the 5 pm EST close is of little significance.
As this stand right now, I’d say there’s a good chance EURUSD will retest 1.1430 as new resistance before moving south. The daily mean as represented by the 10 and 20 EMAs is still up around 1.1500 which suggests a retracement may be in order.
A daily close at 5 pm EST below 1.1430 would expose the year-to-date low at 1.1300. A break below that area could extend the 2018 low to the next key support at 1.1125.
Alternatively, a daily close back above 1.1430 would delay the move to 1.1300. It would also re-expose the 1.1530 resistance area that was responsible for Monday’s selloff.