Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
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The EURUSD consolidation may finally be coming to an end. Since late May, the single currency has struggled to break free from a 300 pip range after falling 900 pips between April 19th and May 29th.
More recently, the pair has been unable to garner enough demand above 1.1730 to reverse the short-term downtrend.
On the other side of the range, the floor just above 1.1500 has held as support on two separate occasions starting with the May 29th low.
The sideways movement has also narrowed in the last five weeks. A view of the daily time frame shows what appears to be a narrowing wedge. Resistance extends from the June 14th high while support begins with the June 21st low.
So far today we can see how the pair has caught a slight bid at 1.1600. That’s right where wedge support comes into play which suggests the market is taking note of this lower level.
However, it’s going to take a close below it to expose the range floor at 1.1500. You could attempt trading a 4-hour close below the level, just know that the daily close (New York 5 pm EST) tends to be more reliable.
Alternatively, a close above wedge resistance near 1.1700 would send the pair higher. Given the recent downtrend, though, I have to favor a break lower. I even stated that this sideways movement looks like a continuation pattern in Sunday’s forecast.
This could very well be the pattern that allows the pair to run free. If we do get a break lower, the 340 pip height of the wedge suggests the Euro may not encounter much demand until just below the 1.1300 handle.
All in all, I remain bearish the EURUSD but won’t consider an entry until sellers can clear wedge support near 1.1600.