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:
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.
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