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After an aggressive rally to end last week, the EURUSD is right back to key support at 1.0990.
It turns out Friday’s move was a bull trap.
And it wasn’t just the EURUSD.
The GBPUSD also carved a monster rally between Thursday and Friday of last week only to crash hard this week.
But if you watched Saturday’s forecast video, you know how stuck I was on using this week’s open to gauge the market.
That’s because those bullish moves from the euro and pound occurred on Friday when volume tends to dry up.
Big moves just before the weekend aren’t always telling.
In fact, they usually get retail traders leaning one way only for the market to move in the opposite direction the next week.
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That’s especially true when you get a break of a key level.
EURUSD is a perfect example.
Last Friday closed above that key 1.1075 area I’ve discussed several times in recent weeks.
Even I was considering buying the pair this week, but only if it started to base above 1.1075, as I mentioned in Saturday’s video.
But the euro didn’t even pause above 1.1075 on Monday.
Instead, the EURUSD gapped lower (without closing the gap) and immediately began to lose ground.
That was the cue for continued weakness.
Fast forward to today, and you can see how EURUSD is once again testing that 1.0990 key support level.
I wrote about this level on January 29th just before the pair rallied over 90 pips.
This time will likely be different, though.
Recent weakness from the euro suggests an imminent break below 1.0990, which would expose 1.0940 and perhaps 1.0900.
Just remember that a “break” refers to a daily close below the level using New York close Forex charts like the one below.
Until we get that 5 pm EST close below 1.0990, the level is intact as support.