The EURUSD is on the move today after testing the 1.1070 support area.
We’ve discussed this range between 1.1070 and 1.1170 for weeks.
The former hasn’t always been perfect (the price action in early December, for example), but it has undoubtedly been a factor throughout 2019.
The 1.1170 area is also well-defined based on the price action since October.
It served as a double top between October and early November and also capped the December 13th advance.
It’s no surprise then to see buyers struggling today at 1.1170.
However, I can’t deny just how impressive today’s rally has been, albeit on lower than usual (holiday) volume.
But everything that occurs between ascending channel support near 1.1070 and descending channel resistance around 1.1200 is just a warm-up.
I think the larger and more appealing move for swing traders will materialize with a break of that range.
That’s just my opinion, but the price action doesn’t lie.
We’ve seen the EURUSD trend lower within this descending channel since the start of 2019.
Even the ascending channel below has been in place since the 2019 low in October.
This is why I maintain that the bigger move from EURUSD is likely to materialize in 2020 with a break of the 1.1070 to 1.1200 range.
Which way will it break?
That’s anyone’s guess.
That said, it isn’t wise to rule out a bullish scenario.
Anyone who did that back in October when the EURUSD broke to the upside got burned, badly.
I think the same rules apply here in that the best approach is a flexible one.
I also think it’s a mistake to dismiss October’s bullish engulfing candle.
If you look at the monthly chart, that October low is still intact, which means the bullish engulfing signal is as well.
But it is going to take a daily close above 1.1200 to confirm a move higher, perhaps towards the 1.1300 handle.
Alternatively, a daily close below ascending channel support near 1.1070 would suggest weakness and a return to 1.0990.