The EURUSD is trying to confirm something I mentioned last weekend.
I commented that the recent close below 1.2000 could be a false break in the most recent market forecast.
Last week, I told members that there was an excellent chance any break below 1.2000 would prove to be false.
Why did I think a false break was likely?
One look at the trend since May 2020 shows that this is a long only market.
Or at least that’s how I’ve treated it.
Ever since EURUSD broke above its multi-year trend line in July 2020, the euro has been on a tear.
Anyone trying to sell the pair since that time has done so against the momentum.
That’s never a good idea.
At a minimum, it’s going to make your trading much more difficult.
And at worst, you’re going to lose a lot of money.
With the EURUSD monthly chart above in mind, it becomes clear why I wasn’t interested in shorting the February 4th sub 1.2000 close.
I even told members on February 5th that it was likely a false break given how quickly the market retested the trend line as new resistance.
It was an indication of significant demand below 1.2000.
The next key hurdle for EURUSD bulls is to secure a daily close (using New York close charts) above the 1.2070 area.
Do that, and I think we see the euro move back to 1.2160 and perhaps 1.2330.
As I’ve stated since last October, a 1.2500 EURUSD later this year wouldn’t surprise me at all.
In fact, I think it goes higher than that.