As the drama in Greece heats up so too does the price action in EURUSD. The ascending channel we have been tracking for several weeks now continues to hold up, but for how much longer?
The fact that the pair found enough buyers to close the gap over the weekend was impressive in and of itself. However I felt the move was a bit uninspiring and was certainly not something I wanted to buy into.
Just two days after the gap close and the market is right back to testing a critical support area. Not only does 1.1050 intersect with channel support, it represents several key turning points including the March highs. A daily close below this level would be significant as it could very well represent a major turning point for the pair.
That said, we have to keep in mind that the situation in Europe is still unfolding which means further volatility and uncertainty in the markets. Combine that with a shortened trading week (Friday’s US bank holiday) and the smart move here is to wait until next week for further direction.
Summary: A daily close below 1.1050 would have us watching for bearish price action on a retest of the level as new resistance. Key support comes in at 1.0820, 1.0658 and 1.0470. Alternatively, a move back above 1.1280 would expose the May high at 1.1450. Waiting until next week before further consideration.