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Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.
The EURUSD sold off right where we thought it might on Thursday.
I wrote about the 1.1030/60 resistance area on September 4.
You can see how this region served as support throughout August.
It makes sense then to assume sellers will want to defend the 1.1030/60 zone as resistance.
However, I’m not selling EURUSD.
Sure, Thursday’s long upper wick signals an influx of selling pressure. And so far, that 1.1030/60 area is holding as resistance.
But trading price action is about more than just looking for candlestick patterns.
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It’s about understanding the ebb and flow in the market.
You see, the aggressiveness of a multi-day move often tells me more than a single 24-hour candle.
Let’s take a look at the EURUSD price action since August 29.
The pair lost 170 pips between August 29 and September 3. That was a four-day move.
Then, on August 3, the euro began its ascent.
Buyers took the pair approximately 160 pips higher between September 3 and the 5th. That was a three-day move.
So EURUSD took four days to drop 170 pips and just three days to claw back 160 of those pips.
See my point?
This does not mean the EURUSD won’t move lower next week. Nobody knows where this or any market is headed.
But I don’t want to sell into an aggressive bullish move like this without a rounded retest.
I also don’t want to go short when a market is coming off a channel floor like the one below, especially when it’s a descending structure.
All in all, the EURUSD continues to be a tough pair to trade.
That’s been the case all year. And given the current stalemate between buyers and sellers, I don’t see it changing anytime soon.
With that said, the pair has more room to move higher than lower just based on the larger descending channel below.
Take that for what it’s worth.