Last Friday, EURUSD closed below a critical level at 1.2150.
That area turned to support following the December 16th close above it.
However, Friday’s close below 1.2150 flipped it to resistance once more.
You can see how the EURUSD is struggling to get back above 1.2150 this week.
All that said, I’m not convinced the euro is heading lower, at least not yet.
For one, the EURUSD monthly chart still looks bullish.
In my opinion, this pullback from 1.2330 is nothing more than a reversion to the mean within a bull trend.
That doesn’t mean the EURUSD can’t move lower, though.
As I mentioned last weekend, the confluence of support at 1.2000 is critical for the short-term trend.
If the EURUSD closes a day below that area, it could send the pair lower, perhaps toward the 1.1615 region.
Alternatively, bullish price action from 1.2000 could signal another leg higher.
And don’t forget that this break below 1.2150 could be a bear trap.
That doesn’t mean it is one, but I wouldn’t be surprised to see the pair close back above 1.2150 before this week is over.
If that happens, be on the lookout for euro strength.
Disclosure: I hold a EURUSD long position.