Last Tuesday I wrote that the future direction of EURUSD hinged on 1.1430. The very next day, sellers had their moment.
The single currency reached a session high of 1.1500 on November 7th, but sellers forced a sub 1.1430 close.
That was our signal to go short. At the very least, it suggested sellers had no intention of letting up.
Between Thursday and Friday of last week, EURUSD gave up another 90 pips. That led me to suspect an imminent breakdown. In fact, that’s exactly what I wrote on Sunday.
I didn’t expect it to happen so soon, but I’m not too surprised given the bearish momentum of late.
Now that you’re all caught up, what’s the game plan going forward?
It’s the same as it has been since late September:
Watch for selling opportunities from new resistance.
In my opinion, the ideal entry was at 1.1430 following the November 7th bearish rejection. The next best entry would be a retest of 1.1300 as new resistance.
But as with every breakout, the question remains:
Will EURUSD retest 1.1300 before reaching the next key support at 1.1130?
That’s anyone’s guess at the moment. However, you never want to chase a market even if that means missing part of a move.
Chances are we’ll see another bounce at some point. Just look at the price action since this latest decline began in late September.
Everytime EURUSD drops more than 300 pips, we get a bounce of approximately 200 pips.
The distance from last week’s high of 1.1500 to support at 1.1130 is 370 pips. And from 1.1130 support to new resistance at 1.1300 it’s 170 pips.
That means EURUSD may or may not retest 1.1300 before moving lower, but the recent price action suggests we will likely see a bounce from 1.1130 back to 1.1300 if sellers make it that far, of course.
To be clear, I have no intention of buying the pair at 1.1130. In fact, I still have my short position from 1.1430 and will likely add to it if the euro does retest 1.1300 before moving lower.
As long as this bearish momentum is intact, I’m only interested in selling.