Will the EURUSD break below 1.1070 or above 1.1100/10 next?
Watch the video below to find out what I think.
Be sure to also scroll down for more commentary and an annotated chart.
The EURUSD has a decision to make.
We looked at the 1.1070 support level and 1.1100/10 last week.
The latest rotation lower from the euro comes following the 300 pip rally from the 1.0900 support area.
I also talked about the breakout earlier this month, which ran for an impressive 190 pips from the 1.0990 support level.
We can see how the EURUSD closed last Thursday below the 1.1100/10 area.
It also carved a bearish engulfing range in the process.
That close meant a retest of the next key support at 1.1070 was likely.
Notice how significant 1.1070 has been for the pair since late July. I would argue it’s the most significant horizontal level with the exception of maybe 1.1200.
So far, the EURUSD is holding above that 1.1070 support level.
But here’s the key when faced with a tight range like this…
Neither buyers nor sellers are in control as long as the pair trades between 1.1070 and 1.1100/10 on a daily closing basis.
As long as 1.1070 is intact as support and 1.1100/10 is attracting sellers, the EURUSD is going to be difficult to trade.
You don’t want to buy with resistance just 10 to 20 pips above your entry.
And you don’t want to sell with support just below today’s price.
That means I’m waiting for either a daily close above 1.1100/10 to go long or a close below 1.1070 to entertain a short position.
However, given the recent price action, I do favor the long side.
I don’t think this latest rally has exhausted itself just yet. I mentioned that in Saturday’s Forex forecast video.
A daily close above 1.1100/10 would expose 1.1200 with a break there taking the pair to the descending channel top near 1.1250.
Alternatively, a daily close below 1.1070 would signal additional weakness and expose the 1.1020/30 support area I discussed on Saturday.