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EURUSD to Remain Vulnerable Below 1.1400

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I mentioned the 1.1340 to 1.1380 resistance area for EURUSD last Saturday.

That’s the intersection of a trend line from the October 2019 high and the top of an ascending channel from March 27th of this year.

Despite their best efforts, EURUSD buyers failed to break 1.1380 this week.

We saw the pair test the area several times, but it never closed above it.

Furthermore, a familiar pattern (at least to DPA members) developed over the last few days that hinted at weakness.

EURUSD 4-hour chart showing an upward sloping flag
EURUSD 4-hour time frame

The 4-hour upward sloping flag above suggested that buyers were tiring.

That’s especially true when you consider the repeated retests of channel support highlighted in blue above.

We’ve seen similar intraday patterns like this before, and almost all of them have resulted in a move lower.

The move lower this time left EURUSD testing the 1.1230/40 support area.

It’s the level I pointed out on Saturday as the one sellers had to break to send the euro even lower toward 1.1150.

As of this writing, the EURUSD is trading at 1.1230 on the dot.

If we see a convincing weekly close below 1.1230, it will open up downside targets next week, including 1.1150 and perhaps 1.0990.

But either way, this recent selloff from 1.1340/80 tells me that the euro is respecting the ascending channel I drew last Friday.

Does it mean a top is in place?

Not quite, but it does indicate that buyers are the ones with something to prove.

Until they clear that 1.1400 resistance area, the EURUSD is vulnerable to pullbacks like the one we saw this week.

And any pullbacks below 1.1400 puts the euro ever closer to breaking the twenty-year trend line I’ve had my eye on for months.

Disclaimer: I hold a EURUSD short position from 1.1293, as announced in the member’s area.

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EURUSD confluence of resistance near 1.1400
EURUSD daily time frame

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4 comments
Justin Bennett says

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Hengky says

Does upward moving slope in your chart H4 above should mean continuation for next uptrend? How are you convinced it will be downtrend? Thanks

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Davoud says

I think it will be down to 1.10300
After this range, it rises.

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Olusegun Isaac says

RE:EURUSD
Dear Justin,
Last week i commented that my wave count up was in iv of wave and that wave v will unfold as a final swing up.Yes my EURUSD wave count did just that(i.e i was able to realised last upswing).I have been buying EURUSD and selling DOLLAR index for more than a week and now taken my profit.This week i want to agree with you on EURUSD bearish bias.From wave angle EURUSD is now in either WAVE A or 1 i.e begining of another cycle.Corollary also applied for DOLLAR INDEX.Thanks for your good analysis.Please keep it up.

With regards
OLUSEGUN

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