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.
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.