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EURUSD to Face New Round of Selling Pressure Below 1.1875

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EURUSD bulls are on the move today. The single currency is testing the new resistance area between 1.1840 and 1.1875. These are two levels we have been keeping a close eye on since early September.

You may recall the September 25th break of ascending channel support. This was a significant development for the pair. Not only was the uptrend broken on this day, but the single currency also printed the first lower (swing) low since April.

Then on Friday, buyers found support at 1.1670. We’ve had this level on our radar since the EURUSD caught a bid here in mid-August. It was also our target following the breakdown on the 25th of September (see link above).

With the September breakdown fresh in our minds and our key levels drawn, this becomes a waiting game.

Apparently, Euro bulls are intent on pushing for a retest of the 1.1875 handle. The 1.1840 level was tested as resistance early this morning but has since broken down on a 4-hour closing basis.

A study of the daily time frame shows what could be the formation of a head and shoulders pattern. The left shoulder developed in early August while the head of the structure was carved out between August 29 and September 22.

Whether or not the pair forms the right shoulder is anyone’s guess. Furthermore, without a daily close below 1.1670, we can’t technically call it a head and shoulders pattern. Until that day comes, this isn’t much more than a talking point.

For now, I’m going to keep an eye on how price reacts to 1.1875. A bearish signal from current levels could take us back down to 1.1670 support and perhaps 1.1490.

Alternatively, a daily close (5 pm EST) above 1.1875 would (at minimum) delay the bearish scenario I just described. It would also expose the next key resistance at 1.2040.

Keep in mind that the FOMC meeting minutes are to be released today at 2 pm EST. Then on Thursday, we have PPI and U.S. unemployment claims at 8:30 am EST followed by Friday’s CPI and retail sales at the same time.

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EURUSD resistance area on the daily chart

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34 comments
Dennoh says

Thank you Sir for the heads up.

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Souheil Chabaro says

Thanks you, watching it for sometime.

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    Justin Bennett says

    Anytime, Souheil.

    Reply
Darius says

If we draw channel which was going down till october 6, cant we say it is broken now?

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    Justin Bennett says

    Sorry, I’m not sure what you’re referring to.

    Reply
Alex Nxumalo says

Thank you Justin

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Roy Peters says

Yes could be head and shoulders developing. On the sidelines for now.

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    Justin Bennett says

    We’ll find out soon enough.

    Reply
Yousef says

Very useful, Thank you

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    Justin Bennett says

    You’re welcome. Cheers.

    Reply
Sizwe says

Thanks sir

Reply
    Justin Bennett says

    You’re welcome.

    Reply
TONY DUONG NGUYEN says

Thank you JUSTN…Thank you…very much!

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    Justin Bennett says

    You’re welcome. Happy to help.

    Reply
Hariyono says

How about situation of EUAUD sir?

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Mr.Quoc says

tks you ^^

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    Justin Bennett says

    Anytime, cheers.

    Reply
Caleb says

1.16996 buy – it’s been a good performer since

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    Justin Bennett says

    Seems like it. Thanks for sharing.

    Reply
Seng says

Thank you for information head up
From Laos country

Reply
    Justin Bennett says

    It’s my pleasure. Welcome from Laos.

    Reply
Phuong Nguyen says

I set sell at 1.187 , thanks

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Phuong says

You wrote: “My initial entry was a few pips above 1.2040 just before the completion of the September 8th bearish pin bar”. Can you explain why you sell? why did’t wait for completion of the pin bar?

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    Justin Bennett says

    The market was overextended so it was a fairly low-risk entry. It was also a small position. The rest was added after the pair closed below 1.2040.

    Reply
      Phuong says

      Thank you for answering my question. i could understand the entry, buy how about stoploss? or have no stoploss?

      Reply
        Phuong says

        Thank you for answering my question. i could understand the entry,. But you sell above 1.2040 (key resistant). there is no price action after the completion of the September 8th bearish pin bar. so, with the entry, where is stoploss or have no stoploss?

        Reply
Priyatno says

Terimakasih pak justin,,,apakah setelah melihat candle di hari kamis bisa di pastikan menuju 1.20xx

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Dan says

Very well spotted. Indeed Friday’s bearish pinbar gives us a hint that we target up to 1.16700. Thanks!

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JOHN says

Euro is still bullish and its going to touch 11970 with support this week being 11780

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Ufoo says

Justin as always your tutorial are very helpful. Thanks a lot. A small question/comment from me: I have seen an outside bar near resistance (1.18956) on the 4 hr chart. On my opinion this indicates a move down.

Reply
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