The EURUSD is at risk of dropping back below an area I mentioned two days ago. 1.1650/60 is the intersection of wedge support and resistance that began forming in late June.
I traded the break of this pattern earlier this month when the pair sold off from the 1.1620 resistance area. I also took profit at the 1.1300 support level which is one that will likely continue to play a role moving forward.
Yesterday’s session bounced right where we would have expected it to. After putting in a low of 1.1652, the EURUSD rebounded 50 pips higher during the U.S. session and into the 5 pm EST close.
However, today’s session has placed the single currency in a precarious spot. The pair is once again retesting the 1.1650/60 area and is also carving a bearish engulfing range on the daily time frame.
With more than five hours to go in today’s session, anything can happen. That said, buyers have their work cut out for them if they intend to convert today’s relatively bearish candle into something more constructive.
If they can’t and fail to hold on to 1.1650 by 5 pm EST, it could turn the pair lower as we head into the weekend. A close below 1.1650 would expose 1.1620 followed by the 1.1500/30 region.
I’ve exited my long position near breakeven and am awaiting further instruction from the market. I doubt I will trade again this week given that tomorrow is Friday and I don’t want to enter a new position so close to the weekend.