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EURUSD continued to move within the 4 hour bearish channel today. This channel began forming in early October after the pair suffered a 1,500 pip decline. That decline came on the heels of a double top that formed between March and May.
This channel does look corrective to me and as such it’s likely that we will see an eventual break of channel support. Whether that break happens on the next 4 hour swing low is anyone’s guess. But a close below support could present a nice opportunity to look for a short entry.
As expected, NZDUSD has been forming a similar bearish wedge which I covered in yesterday’s commentary. Due to the heavy positive correlation between the two pairs, I don’t recommend trading both should we get a break to the downside.
A quick glance at the monthly chart shows us that the area from 1.220 to 1.234 should act as support going forward.
EURUSD monthly chart
Summary: Watch for a close below channel support on the 4 hour chart. From there we can watch for a retest of support turned resistance. The next key support zone lies between 1.220 and 1.234.