Over the weekend we looked at where the EURUSD might find buying and selling pressure in the week ahead. However, our scope was limited as the result of the French elections – which would no doubt impact currencies – had not yet come to pass.
Now that markets have had some time to digest the outcome let’s revisit the single currency.
One thing I mentioned on Sunday was the idea that the pair needed to break 1.0900 on a daily closing basis to expose higher levels. It’s no coincidence that the EURUSD opened at 1.0902, just three pips below the March high.
Another level on yesterday’s chart was the 1.0825 handle. It’s played a critical role since 1999 and is also the 38.2% Fibonacci retracement from the 2016 high at 1.1615 to the current 2017 low at 1.0340.
So far today’s low is 1.0820 and price is off that low by 40 pips at the time of this writing. But I want to turn your attention to a level I haven’t mentioned for quite some time.
There is a trend line that extends from the 2016 high that has held buyers in check on several occasions over the past twelve months. One such instance was the November 9th U.S. elections rally as well as the late March swing high.
Will the EURUSD close today’s session above trend line resistance?
At the moment the answer appears to be a resounding yes. The pair would need to drop 70 pips before 5 pm EST to maintain this trend line as resistance. Then again, we just witnessed a 180 pip gap up, so anything is possible.
Speaking of the gap, the longer it goes unfilled, the more bullish are the implications. But until we have a few days of activity behind us it will be difficult to know what kind of gap it is.
For that reason, I’m going to stand aside for now until more information becomes available. Keep in mind that the Euro will be vulnerable to unscheduled event risks such as poll results and political rhetoric leading up to the May 7th run-off in France.
Key levels in focus at the moment include 1.0825, 1.0870, 1.0900 and 1.0950.
Want to see how we are trading this setup? Click here to get lifetime access.