Daily Price Action
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EURUSD Rally Stalls at 2008 Trend Line (Again)

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

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On Sunday I mentioned a short-term trend line on the EURUSD that could offer a buying opportunity this week. The level extends from the February 16 high and had capped the single currency on several occasions before Monday’s breakout.

Despite yesterday’s bull move, there was never much of an opportunity to get long. By the time the day closed, the single currency was just 30 pips below the 2008 trend line resistance.

I pointed out the 1.2450 area on Sunday as a possible target should the EURUSD break free from this short-term trend line. If you entered short at or near 1.2450, today’s decline has generated a quick 70 pips for you.

For me, today’s selloff from the 1.2450 area is significant for one reason – it tells me that the 2008 trend line is still a factor. It also means this multi-month terminal pattern still has a pulse, and that a break could trigger a multi-month run.

That’s the opportunity I’m most interested in at the moment. Sure, you could buy and sell within this tight range in the meantime, but recent price action has been relatively choppy which puts your trades at a higher risk of getting stopped out.

A lot of traders may view inaction such as this as missing opportunities. I get it. It’s easy to get caught up in these big daily moves and start chasing pips.

The way I see it, though, is that this is a spring that’s getting compressed from both sides. I would rather protect my funds so I’m ready when the spring pops than risk depleting some of my capital by chasing pips.

In the near-term, as long as the 2008 trend line near 1.2450/70 holds on a daily closing basis (using a New York close chart), the terminal pattern is still intact. Immediate support comes in at the short-term trend line near 1.2320/40.

If buyers are unable to keep prices above that 1.2320/40 area, we could see another run at the April 2017 trend line. Alternatively, a daily close above the 2008 resistance level would expose higher levels.

I’ll be sure to provide updates as we get closer to a break of this twelve-month terminal pattern. But until we get a close above trend line resistance or below the April 2017 trend line support, I will be on the sideline.

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EURUSD terminal pattern on the daily chart

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14 comments
Deon says

Great analysis

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Brighton says

Woow thanks Justin

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Vicky says

Sir, Whats your 2008 Trend line 2nd point after 2008 High, Is it 2009 Dec or 2011 May? or some other point I have drawn some trend lines from 2008 , But That has some more width above.. coming around 1.2540 around today

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Chucks says

On Sunday, you listed the resistance of the short-term trend line that extends from the February 16 high as 1.2350 and today same resistance is now 1.2320/40. I could recall that you said that you treat the resistance as ‘area/zone’ not a point. But the resistance area with 30pips looks clumsy and confusing

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    Justin Bennett says

    It’s a trend line, so the points of future support/resistance will change with time.

    On Sunday 1.2350 was resistance. By the time the EURUSD moves lower (if it does), the new support area will likely be near 1.2320/40. If it takes another week to move lower, the area would be closer to 1.2300.

    I see nothing confusing about that. It’s also no longer a resistance area, so I’m not sure why you’re referring to it as such.

    Reply
      Chucks says

      So if I got you correctly, only horizontal S/R is static while trend line S/R varies with trend of the market

      Reply
        Justin Bennett says

        What varies is the price at which the market interacts with the level.

        A horizontal level at 1.2160 today will be the same a year from now. The price never changes.

        Alternatively, the price at which a market interacts with a trend line today will be very different a year from now. Hence the difference between 1.2350 (resistance) on Sunday and 1.2320/40 (support) today.

        Reply
        SLW says

        I would say that horizontal zones are only static as long as the market is respecting them.

        Reply
          Justin Bennett says

          I agree, but that’s implied by my last comment.

          Reply
Sohailkhan says

Please help me urdu spech

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Pan sein says

12:00am.time set.stock.money.(what)?.Thailand..

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FELIX GREAT says

Thanks Justin for the Analysis. God bless you Sir.

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R.Bambang Sutrisno says

Terima kasih informasinya..

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Kevin says

As you are on the sidelines I will be collecting the loose pips

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