The EURUSD has worked out exceptionally well for us of late. I first mentioned the continuation pattern in the form of a wedge on August 2nd. Then came the retest of the 1.1620 area earlier this month.
As I stated in those posts, the target for the trade was the 1.1300 handle. It was the 340 pip objective of the wedge as well as a key pivot between June and July of last year.
Last week reached a low of 1.1300 to the pip. I exited the short position and wrote about how a bounce seemed likely given the circumstances.
To say the EURUSD has been moving as anticipated would be an understatement.
The question everyone wants answered now is will new resistance at 1.1500 hold? It’s certainly attracting offers so far in today’s session, but can sellers keep the single currency below the level into the New York 5 pm EST close?
The answer remains elusive for now. With six hours to go until the session close, anything can happen. And if you attempt an entry without a proper sell signal such as a pin bar, you could find yourself on the wrong side of the trade in a hurry.
One thing we’ve been discussing in the member’s area is just how far today’s price is from the 10 and 20 exponential moving averages on the weekly chart.
You’ll notice that the pair has reverted to the daily mean as illustrated by the 10 and 20 EMAs, but the weekly is another story. Despite the recent bounce, the single currency is more than 100 pips below the weekly mean which is near 1.1650.
That doesn’t mean the pair won’t move lower from 1.1500. With the right bearish price action, sellers could hold the area and push prices back to 1.1300 support.
What the distance from the weekly mean does suggest is that offers may be harder to come by without some additional upside first. In other words, the EURUSD may need to blow off more steam before sellers are ready to jump back in.
We’ll know soon enough, but considering the above, I’m going to hold off on this one for now. I want to see how the market reacts to this 1.1500 region, and I’m certainly in no hurry to risk the profit from my recent short position.
A daily close at 5 pm EST below 1.1500/10 would keep the immediate bearish outlook alive. It would also keep the pressure on last week’s support at 1.1300.
Alternatively, a daily close above 1.1500/10 would delay the bearish outlook and expose the confluence of resistance near 1.1650.