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EURUSD Bulls Not Ready to Back Down

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On Tuesday we looked at how the EURUSD had closed back below the 1.1875 handle. It came after both the November 24th and 27th sessions had closed above it.

Even today, last week’s break above 1.1875 appears to have been false. While it is true that the Euro is trading above the level as I type this, we haven’t had a daily close above it since Monday.

One thing I also mentioned in that commentary is the nearby trend line support at 1.1810/15. Today’s low so far is 1.1808, and that’s no coincidence.

EURUSD 4-hour trend line support

Notice how the single currency caught a bid right where we’d expect. The trend line that extends from the November low is very much in play and is one worth keeping an eye on.

From here it’s all about the daily close at 5 pm EST. As long as the pair remains below 1.1875 into the close, there’s a high chance of a move lower.

However, I don’t need to tell you that the EURUSD is running out of real estate. Market participants are going to be forced into a decision within the next day or two.

A 4-hour or daily close below trend line support near 1.1830/40 would expose the 1.1670 handle. A daily close below that would target the November low at 1.1553 followed by 1.1490.

Alternatively, a daily close back above 1.1875 would put the focus back on 1.1960 followed by 1.2040. The latter was responsible for the September 8 bearish pin bar that kicked off the two-month pullback.

Just be careful here. If a market begins to ignore a level that it respected previously, it may not be worth considering at all. That tends to occur more frequently in low liquidity environments like that of late November and December.

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EURUSD support and resistance on daily chart

Leave a Comment:

10 comments
Sa says

Dear sir,
Can you share your opinion on Gbp/usd

Reply
    Justin Bennett says

    I might post about it later today.

    Reply
Isaac says

Thanks for the update

Reply
    Justin Bennett says

    You’re welcome.

    Reply
TripTrap says

Per usual Justin excellent stuff picking out all the important levels. They are now duly noted on my EurUsd chart. The trend line support that you have spoken about previously, 1.1810-20, proved to be an excellent opportunity to get long today. Thank you!!

One observation if I may; the 1.1875 handle that you have noted as very important is of course the top of the right shoulder of the massive head and shoulders pattern that was formed over Aug, Sept and October. Most traders are aware of this pattern and this one was textbook perfect. However a FAILURE of that pattern can also be excellent to trade. In other words price closing above the right shoulder like it did on Friday, Nov 24th, then testing the breakout this week and now today perhaps closing decisively above the right shoulder 1.1875 could lead to a nice, dare I say, massive next move to the upside. But like you said it all depends IF it does manage to close above 1.1875 at today’s (Thurs) 5pm EST close and stay there. Also want to see it take out Monday’s high 1.19609 ASAP so this second push above 1.1875 does not turn out to be a failed second push. Need to keep those rising bottoms and tops in play. My $$$ is with the bulls unless I see a close below 1.1875 or an obvious rejection of 1.19609. Looking forward to seeing how it all plays out…

Btw…I do plan on joining your group soon and am sure there is a lot I could learn from you 🙂

Reply
    Justin Bennett says

    Absolutely. I often play false breaks, which is what you’re referring to with the invalidation of the head and shoulders. Thanks for sharing.

    Reply
      Chuck says

      Justin do you mind emailing me your broker suggestions. I’m in USA

      Reply
    Chris says

    Hi TripTrap
    In my opinion we are at the start of a larger degree wave 3 down in eur/usd. We have a solid ABC counter trend rally to recent highs 1.197, which is top of wave 2 of smaller degrees which will drive into wave 3 of larger degree 3; a powerful combination. I pulled the trigger too early today on a break of the resistance line. I’m short again in the 1.190 region and will add to this once we have a solid break of the upward trend line. It’s gonna fall very quickly I reckon. Even if I’m wrong I just can’t get long on this, everything is screaming wave 3 down about to ignite.

    Reply
Sa says

Dear sir,
I’m just a new in this. May I know to check the daily close 5 pm est if I’m using broker 8 am.
Tq

Reply
Sagitario says

No one is talking about GBPUSD, I made lots of pips in the last 2 days 🙂

Reply
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