The EURUSD broke a key level early last week.
I’ve discussed the importance of falling wedge resistance for several weeks now.
However, the late week pullback raised some doubts among buyers.
Anytime a market gives up nearly 100 pips of gains in two straight losing sessions, it’s a sign that supply is outweighing demand.
That isn’t what you want to see during a pullback.
However, there are two reasons why this time is a little different.
For one, volume in the Forex market doesn’t usually come back until the third week of January. That’s this week for those counting.
That means last week’s pullback occurred on relatively low FX volume.
Second, but in the same vein as the first, late week moves are always suspect. Volume dries up on Fridays, and profit-taking becomes a primary market mover.
So where does that leave us?
In my opinion, it leaves us with the EURUSD bullish potential I mentioned on December 24th very much intact.
The pair is still holding above the 1.1450 support level I’ve commented on several times in recent weeks.
Even if EURUSD drops below 1.1450, it wouldn’t necessarily negate the bullish potential.
Former wedge resistance (blue line) is what needs to hold on a daily closing basis.
Click here to get access to the same “New York close” charts I use for trading price action.
As long as EURUSD is above it, buyers have a chance.
I’m still long here. First at 1.1360 and again at 1.1425. I will continue to monitor the price action, but right now I have no reason to exit my position.
As always, members will know what I’m doing before anyone else.
Key resistance comes in at 1.1620 followed by 1.1730.