The EURUSD is testing a key trend line today near 1.2040.
I mentioned this level in the last two weekly forecasts.
It extends from the May 2020 lows and intersects with the November lows from last year.
Keep in mind that 1.2000 is also a key horizontal level.
Not only is it a “big round number”, but it’s also the top of the multi-month consolidation that occurred late last year.
I also think traders need to be careful trying to short the EURUSD.
While we could see additional weakness following a daily close below 1.2000, the July 2020 breakout is still very much intact.
Notice how EURUSD broke out last July and has trended higher ever since.
And just because a market breaks a trend line support does not mean the bullish momentum is gone.
The euro would have to take out the 1.1615 lows to challenge the monthly breakout shown above.
But first, sellers have to deal with the 1.2000 to 1.2050 support area.
I discussed this one on Saturday.
Any bullish price action such as a pin bar from that region could offer a buying opportunity.
Alternatively, a daily close below 1.2000 would suggest further weakness and expose 1.1880.