EURUSD had a banner session yesterday. After rallying a massive 240 pips from low to high, the pair settled 45 pips above former confluent resistance at 1.1050. This level marks the December 2015 high and is also former trend line resistance that extends off of the prominent August 2015 high.
Any rotation back to this former resistance area (new support) could make for a compelling buying opportunity. However, given the sheer size of yesterday’s move, I wouldn’t be surprised to see some consolidation above the 1.1050 handle before the next leg higher materializes.
As for targets, buyers could run into some trouble around 1.1210, however, yesterday’s break could very well target former channel support that extends off of the 2015 low. See chart below.
On the flip side, a close back below 1.1050 would negate the bullish bias in the short-term and expose former swing highs near 1.10.
Keep in mind that Draghi is scheduled to speak at 3am EST. As such, and considering the recent increase in volatility, I will only entertain a long position if I see a convincing bullish rejection off of the new support level at 1.1050.