EUR/USD: Re-test expected before further downside
Good morning EFX Viewers! I write this article from my sun lounger in the sunny mountains of Santorini, Greece; sipping the local beer “Volkan” whilst mulling over the charts. But let's get straight into the technicals:
Last week was a crucial one for the most liquid currency pair there is. Breaking below a major support level and setting new lows for the year. Using our strategies along with multiple timeframe analysis we expected this move a while back, looking at the monthly/weekly alone we can see extremely bearish price action shaping up.
From a weekly perspective, many inexperienced traders were “hoping” for a reversal at 1.12 as they saw the falling wedge, a bullish reversal pattern within a downtrend. However, many traders did not anticipate the monthly/daily timeframes. Marches candle was a very nice shooting star, and on the daily timeframe, we have a downward sloping channel capping price since the start of the year. Diving into the weekly time frame a little more, we can see a failed falling wedge when a pattern breaks to the opposite side of its intended direction we tend to see a more violent move.
At the time of writing, price is currently sitting below our major resistance level at 1.12. I would favour a re-test of this major level before more downside momentum kicks in. This would coincide with 5 of our confluences we look for when taking a trade.