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EURUSD Shorts Need to Be Careful

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The EURUSD hasn’t been the most exciting pair to trade lately.

If you’re a scalper you may be having a field day with all of these 30 to 40 pip moves north and south.

But for a swing trader like myself, it’s been a snooze fest.

Here’s the daily chart I’ve been posting for several weeks now:

EURUSD descending daily channel

As you can see, there hasn’t been much to do apart from maybe buying at channel support and selling at resistance.

Of course, it’s always easy to write that in hindsight.

But what if the channel resistance you see above is part of a much larger level?

In fact, it’s best if I move to the weekly time frame to show you what I mean.

Using the March 2018 high at 1.2477 as a starting point, we can draw a descending trend line that connects with the April 2018 high.

Now, here’s where it gets interesting.

The channel resistance in the first chart lines up almost perfectly with this larger trend line from the March 2018 high.

That makes five contact points including the March 2018 high.

To be fair, I tried drawing a similar pattern to the one you see below late last year.

It didn’t work out. But that’s the way it goes sometimes.

As I’ve mentioned in the past, there is no right or wrong in the eyes of the market.

It’s just feedback.

However, the trend line I was using last year only had two contact points whereas this new one has five.

So if this new falling wedge is correct, I would caution EURUSD shorts here.

We may see the euro continue to weaken over the short-term, but the pair is running out of real estate.

Within the next few months, this wedge pattern is going to force the market’s hand.

And in my experience, a falling wedge like this is all but guaranteed to trigger a move higher.

I will get into objectives if and when buyers close EURUSD above wedge resistance on a daily closing basis.

Until then, expect this downward consolidation to continue.

IMPORTANT: I use New York close charts so that each day closes at 5 pm EST.

Click Here to get access to the same charts I use.

EURUSD falling wedge on weekly time frame

Leave a Comment:

24 comments
Michael says

Justin, well done. But trust me, there is another level of understanding after reading this. I’ll say scalping makes more money than wait and wait.

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    Justin Bennett says

    Do me a favor and search Google for “most profitable Forex style” and let me know what you find.

    The millions of results prove my point that there is no universal “best” style or strategy.

    It’s all personal preference. Anyone who claims otherwise is trying too hard to sell something you probably don’t need.

    Reply
Ehiz says

I have similar markup on chart.. I thought buyers were ready last week, because that was the 5th touch. unfortunately sellers jumped in, i had no choice but to follow them. Just hit my 100pips target today.

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    Justin Bennett says

    It has taken EURUSD a year to carve the pattern above. There’s no reason to think it’s going to break in the next few days.

    That’s why I wrote:

    “Until then, expect this downward consolidation to continue.”

    Reply
saifraza says

justin you did the end of analysis great your analysis is 100 percent correct i am disgusting for two year nobody give correct information like you i am very thankful to you

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    Justin Bennett says

    Cheers. I’ll leave it to you to determine what is “correct”. 😉

    Reply
aaisha says

gud one

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Adebayo saheed says

Thanks

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    Justin Bennett says

    You’re welcome.

    Reply
Abul Hasanath says

The wedge resistance was tested three times recently and sellers have failed to create a new lower low so far. May be our old 1.1300 is the finishing line for sellers. BTW this wedge is a part of a greater falling wedge in the monthly. Thanks.

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    Justin Bennett says

    I noticed that as well. I’m just watching from the sideline for now.

    Reply
      Pierre Mifsud says

      As for me I can at best presently interpret the EURUSD from the 4 hr time frame. It seems that it is heading for more lows to reach its support at 1.127 which stands at the 1.618 fibonacci ratio…from there it is expected to buy and reach the 1.13963 handle

      Reply
        Justin Bennett says

        Thanks for sharing your view.

        Reply
Mike says

Scared to trade this one 😂😂. Good luck 👍

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    Justin Bennett says

    You’re not alone. I think a lot of traders feel the same way.

    Reply
Sumantra kumar halder says

Excellent

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CHRIS says

Great analysis of that falling wedge Justin, hadnt spotted that but was persuaded to go short yesterday anyway based on those two daily bearish pin bars which actually intersect that trend line nicely. Hit target at 1.1300 earlier today for 50 pips. I like a combination of short/long term trades.

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    Justin Bennett says

    Cheers, Chris. I”m not a fan of shorting EURUSD right now regardless of the target.

    Reply
Ralph says

Hi Justin,
What s a falling wedge?

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    Justin Bennett says

    See the link I provided in the commentary above. Anything highlighted in orange is a link.

    Reply
      Ralph says

      Nice one
      Tnks

      Reply
        Justin Bennett says

        You’re welcome.

        Reply
ngo ha says

thanks you so much

Reply
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