Daily Price Action
Shares

EURUSD Closes in on “Must Hold” Support Ahead of Weekend Catalyst

Shares

Important: I use New York close charts. Click Here to Use My Preferred Broker

The EURUSD encountered selling pressure this week right where I thought it might. On Sunday I pointed out how the February 21 session closed below 1.2330, which meant the area was likely to attract sellers on retests.

Another level I mentioned on Sunday was the short-term trend line that extends from the January 18 low. I suspected this area would attract buying pressure on a retest this week.

However, yesterday’s session closed below the level without much hesitation. It did find some intraday support near 1.2237, but that was extinguished by the session close at 1.2232.

While I was anticipating a move lower this week, I didn’t expect this short-term trend line to break so easily. It’s particularly surprising given that yesterday’s session was down nearly 80 pips when sellers encountered support at 1.2237.

The lack of a bid in the area is yet another indication that sellers remain in control in the near-term.

That said, the intermediate trend is still bullish. As long as the EURUSD trades above the April 2017 trend line (see chart below) on a daily closing basis (using New York close charts), the potential for additional gains must be respected.

A daily close below that trend line, currently near 1.2100, would be a significant development. It would be the type of breakdown that could reverse a multi-month trend like the one we’ve seen since January of last year.

What kind of event could trigger such a breakdown?

While I never try to forecast the outcome of an event or the market’s reaction to it, this weekend’s Italian election has the potential to be a bombshell. It’s another event that, depending on the outcome, could shake things up for the Euro and not in a constructive way.

Whether or not that becomes the catalyst for a break lower is anyone’s guess.

What I do know is the technicals are stretched, particularly on the weekly and monthly time frames. And given that the EURUSD is coming off trend line resistance from 2008, a rotation lower over the coming weeks and months would not surprise me.

In the near-term, the pair will likely struggle to gain traction above the 1.2250 area. Key support comes in at the January 18 low of 1.2160 followed by 1.2080. The latter will be the one to watch if the pair tests it in concert with the April 2017 trend line.

Free Webinar: Learn how I trade pin bars, draw key levels, and much more! 

Click Here to Register

EURUSD key support on the daily chart

Leave a Comment:

19 comments
Maddy says

Great analysis justin, kudos to you man….the yen pairs were also going according to ur analysis :)….before getting mail or msg iam seeing ur analysis on the website…haha..thank you so much.

Reply
Dale says

hi Justin, just want to ask if do you use 4-Hour chart in your trades? Or just the Daily chart alone? thanks

Reply
    Justin Bennett says

    I utilize both.

    Reply
Quincy says

Amazing job you are doing. Is this not a double top that has been formed and is the neckline broken? Thanks.

Reply
    Justin Bennett says

    I wouldn’t necessarily trade this as a double top.

    Reply
      Vasco says

      hey justin why you would never trade that as a double top??

      Reply
Roy says

i agree coach. that election could be something for the euro. i may add to this position but first i want to see how price reacts to the 1.21633 region.

excellent analysis as always. thank you.

Reply
russell says

Guess I’d drawn my analysis wrongly on my daily.
On my chart it shows that eurusd has broken out.
& my support is at 1.216429. Yesterday’s candle closed outside the trendline.
& proceed to drop today.
A lower high developed after closing yesterday’s candle.
Considering that I do not have any lagging indicators on my chart based on your guidance.
I take it it’s a sell till it reaches support or till we see a bullish pin bar or inside bar.
This is all from the knowledge I learnt from you.

Reply
T:) says

In the event that we have a bombshell in the Italian elections (what would that be in practice… failure to form majority government? Berlusconi victory….) what effect would you this this would have on the GBP…? (I realize that this is just speculation… just wondering)

Reply
    Justin Bennett says

    Time will tell. As I mentioned above, I don’t like to forecast outcomes or the market’s reaction to such events. It’s best to let the market do the talking.

    I will add that I remain short the GBPUSD, once at 1.4058 and the second on yesterday’s close below ascending channel support. I mentioned both on Monday, link below.

    https://dailypriceaction.com/daily-setup/gbpusd-terminal-pattern-nears-completion

    Reply
Vasco says

Thanks Justin, learning a lot from your anlysis

Reply
Samuel+Nwofoke says

Thanks a lots.

Reply
Alidu yahuza says

Though these an area i would always want to venture into, as youn man, but i either have very little or no knowledge when it come forex trade,would please want you to help as professional to get an endeph knowledge about this trade.thank you.

Reply
Obeid Andrew says

Seems a very good business investment

Reply
toluene says

please coach,kindly the price text on the right more clearly..thanks for this..

Reply
    Justin Bennett says

    It’s quite clear when you zoom in.

    Reply
rich says

Thanks justin,how far back do you go to look for daily support and resistance lines? I’ve been going back about a year is that far enough?

Reply
    Justin Bennett says

    As far back as necessary. It depends on how much price action there is to the immediate left. If there isn’t much, you’re forced to go back a few years.

    Reply
Haroon says

After bullish candle on EUR USD so it means it will go up again?

Reply
Add Your Reply