Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
Click here to get access to the same charts I use.
On Sunday I wrote about a trend line that could cap EURUSD advances. The level extends from the May 14 high and came in right around 1.1740.
I also mentioned a support level at 1.1720. Due to the way the pair has pivoted from this area since August of last year, this was a must hold level for buyers.
Despite closing just above the 1.1740 area Tuesday, the EURUSD slipped well below the trend line during yesterday’s session. At one point, the single currency was below the level by nearly 50 pips.
However, an afternoon rebound put the pair back above 1.1720 as well as the May 14 trend line near 1.1740. As long as the EURUSD holds above the 1.1720/40 area on a daily closing basis, the bullish scenario is alive.
That said, the past two sessions wouldn’t give me much confidence if I were a Euro bull. Monday closed with a long upper wick and Tuesday barely managed to close above the key 1.1720/40 area.
The implications of this week’s movements so far are difficult to discern. I don’t see much in the way of a buy signal, nor do I want to short the pair into a critical support area.
As such, I’ll stay on the sideline until a favorable opportunity presents itself. And if we do get a move higher over the coming weeks, I will be on the lookout for sell signals from 1.1830 or perhaps 1.1940.
Keep in mind that ECB President Mario Draghi speaks on Wednesday at 3 am EST. His remarks tend to shake things up for the Euro, so expect an increase in volatility around this time.
Want to See How We’re Trading This?
Click Here to Join Us and Save 40% – Ends July 31st!