On Monday we looked at a EURUSD pattern that reminded us to stay flexible.
It hints at a possible bullish reversal within a longer-term downtrend.
But I’ll repeat what I wrote Monday: this pattern requires a daily close above the 1.1430 area to confirm it.
The “daily close” refers to the New York 5 pm EST close. These charts are required for trading price action.
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Until that happens, EURUSD will remain range bound.
And that’s an understatement. Just look at how indecisive the euro has been since that November 20th bearish engulfing day.
I’m not surprised though.
That session on the 20th of last month was right before the U.S. Thanksgiving holiday. It usually marks the start of the relatively slow year-end period that runs through December.
So you could say EURUSD is playing its part in this holiday lull exceptionally well.
But there’s something else that could be holding market participants back.
It’s no secret that next week is a big one for the Brexit saga. December 11th to be more precise.
And while we all know that Tuesday’s vote will affect the pound, the euro won’t escape the volatility. Not by a long shot.
That uncertainty is likely why EURUSD is struggling to make progress.
I wouldn’t be surprised to see this sideways movement continue right up to Tuesday’s Brexit vote.
However, despite the lack of conviction (so far) in this inverse head and shoulders pattern, I want to expand on Monday’s post.
I always like when measured objectives line up with key areas.
That’s true even if the pattern in question is still developing.
In the case of EURUSD, if buyers do confirm this reversal next week, the measured objective comes in near 1.1700.
For those who have followed me for a while, you’ll remember that 1.1730 was a key level of ours back in August and September.
It’s also the 38.2% Fibonacci of the year-to-date range. Of course, 1.1700 is not 1.1730, but it is close.
There’s another reason I like that 1.1700 area.
If we draw a descending channel using the August and November lows, you can see that resistance would come in around the 1.1700 handle.
That lines up with the 270-pip measured objective.
All of this is just something to keep an eye on next week.
There is no opportunity here in my opinion, at least not yet. I’m also not ready to turn bullish EURUSD. In fact, I’m still quite neutral as I was on Monday.
If buyers can clear that 1.1430 resistance area next week though, I have every reason to suspect a move to the 1.1700 area.
Just remember that it’s going to take a daily close (New York 5 pm EST) above it.
Alternatively, if sellers take out the November 28th low at 1.1267, it would likely negate the bullish potential and would re-expose 1.1215 support.
EURUSD remains a waiting game for now. Perhaps Tuesday’s session will provide us with some answers.