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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 pointed out a confluence of resistance on the EURUSD at 1.1660/70. It’s the intersection of wedge support and resistance. I mentioned this pattern on August 9th and again on the 15th when our target at 1.1300 was reached.
One reason I’ve favored the EURUSD lately is the way it’s respecting key levels. It’s been relatively predictable especially when compared to something like the indecisive USDJPY.
Here’s the exact EURUSD daily chart I posted in the member’s area on August 15th:
And here’s how the pair looks today:
You’ll notice that channel resistance is the same as wedge resistance I’ve posted several times in recent weeks. Using a single level to draw a channel can be an excellent way to find targets when trading wedge patterns.
You can learn more about this technique here.
Fast forward to the last 24 hours and you can see that instead of stalling at the 1.1660/70 resistance area, buyers sliced right through it. I’m not surprised though given how the single currency didn’t hesitate at 1.1500 either.
Since hitting our target on the 15th, the EURUSD has rallied more than 400 pips in just ten trading days.
The pair is also carving what could be a 400+ pip bullish pin bar on the monthly time frame. A lot can happen in the days that remain this month, but this is something I’ll be keeping an eye on moving forward.
Upon closing above 1.1660/70 resistance yesterday, the pair retested the area as new support early in today’s session. I decided to go long at 1.1670 with a stop below yesterday’s candle at 1.1585.
As long as the EURUSD remains above 1.1660/70 on a daily closing basis (New York 5 pm EST), I see no reason why the single currency can’t reach 1.1940. It’s a level I’ve had on my chart for quite some time.
It’s also just over 300 pips from the 1.1620 horizontal level which is the same distance as the range that developed between 1.1300 and 1.1620.
Alternatively, a daily close back below 1.1660 would negate the bullish outlook. It would also re-expose the 1.1620 support area.
Keep in mind that the pair may encounter a few sellers at 1.1830. It’s another level I’ve kept on my chart for several months now. The area served as a key pivot between May and mid-June. The 1.1740 resistance area is another one to watch over the next few days.
Last but not least, mind the daily mean as represented by the 10 and 20 EMAs below. No trend is without pullbacks, and with 150 pips between today’s price and the daily mean, the odds of a rotation lower are elevated.
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