On Monday I discussed how the EURUSD was vulnerable below 1.2435. As I was publishing the post, the single currency closed at 1.2428 on the 4-hour chart, signaling a clean break of channel support.
Although we saw immediate downside pressure following the break, the next 24 hours were filled with a lot of back and forth action. However, I remained bearish given that the pair was staying well below former channel support.
The first key level below 1.2435 came in at 1.2325. We saw this area come under pressure during Tuesday’s session, buy buyers held their ground into the close.
That changed on Wednesday. The 1.2262 close put the single currency well below the key level at 1.2325. It also exposes the next area of interest at 1.2160 followed by 1.2080.
I mentioned to members just the other day that I believed the EURUSD to be heading toward the 1.2080 area.
Here’s the chart I posted for members when the pair was trading at 1.2411:
Now, one of two things will happen at this trend line. Either the pair will find support and bounce, or it will close below it.
If we get a bullish price action signal on the retest, it will present an opportunity to get long. And the support levels outlined in the chart below would become resistance.
On the other hand, a daily close below it would signal a more significant reversal. My target, in that case, would be the November 2017 low at 1.1555.
But there’s no evidence of any of that just yet. For now, it’s all about 1.2325 resistance and support at 1.2160 support followed by 1.2080. As long as the 1.2325 level holds as resistance on a daily closing basis, the downside remains exposed.