The EURUSD is testing the top of a key support area today.
On Tuesday, I wrote how the region between 1.0990 and 1.1020 was one to keep an eye on moving forward.
I also stated that a close below 1.1070 could trigger a move lower.
So far, we’ve seen the EURUSD trend lower following the close below 1.1070, but what about the support area between 1.0990 and 1.1020?
The 1.0990 level is where the euro caught a bid following the October 11 breakout.
You can also see how 1.0990 served as a pivot between September 11 and October 15.
The 1.1020 area, on the other hand, is more obscure.
However, it has been influential since early September and also helped attract EURUSD buyers on October 15.
Note too that 1.1030 is the 50% retracement of the October range, which was a bullish engulfing month.
Just below this 1.0990 to 1.1020 area, we have ascending channel support.
Notice how the upper level extends from the August 1 low and intersects with several other lows and highs along the way.
But we don’t yet have a retest of that channel support at or just below 1.0990.
So does all of the above mean I’m bullish the EURUSD?
Not exactly, but I am keeping a close eye on how the pair reacts around this area next week.
If you watched Tuesday’s video, you know that I stated channel support was a must-hold level for buyers.
That doesn’t mean I’m bullish the euro or that I’m buying the EURUSD.
It simply means that I’m watching how the pair reacts between 1.0990 and 1.1020.
If we see a buy signal develop in this area, I see no reason why the EURUSD can’t push higher again like it did last month.
Alternatively, a daily close below that channel support at or below 1.0990 would suggest weakness and could re-expose the year-to-date lows.
As you can see, I’m relatively neutral on the EURUSD in the short-term.
Yes, the longer-term trend is pointed lower, but that doesn’t mean we won’t see 200 to 300 pip corrections along the way.
Look no further than the October bounce at 1.0900.