EURUSD Nears Major Climax Top From March
Cory Mitchell, CMT
The EURUSD uptrend has entered the minor resistance zone, discussed yesterday, between 1.1390 and 1.1425. This is the June peak.
The area I am most interested in is the March peak, just below 1.15. This was a climax top. Following the global outbreak of Covid-19 the EURUSD surged, and then tanked the other way, rallying more than 6% and then dropping more 7% in one month.
The pair is now nearing that 1.15 mark again, trading at just above 1.14 as I write.
EURUSD Reversal Lower Scenario
Based on the daily chart, these are definitely areas the price could reverse lower off of. A false breakout above the highs is likely to precede a drop, if it is to occur.
There are multiple price targets if that drop occurs. The first, using the daily chart, is the bottom of the short-term rising channel, near 1.1330 to 1.1350. Below that, 1.1160, then 1.09 to 1.0850.
I will be watching for a breakout above the key levels, followed by a reversal back to the downside. This will likely set up a high reward:risk trading opportunity.
Yet, the reversal lower may not occur. If the price continues to move above the 1.15 region, the uptrend remains intact.
EURUSD Upside Scenario
Right now the trend up is up. Opportunities to get long have occurred along the short-term rising trendline; the trade opportunities are more visible on the 4-hour or hourly charts. If the pair remains strong, those are the opportunities I will continue to watch for.
Following a breakout to the uspide, the pair will often pull back to the prior breakout point, presenting an opportunity to enter long (wait for a consolidation and break higher from consolidation). Also, the pair may form a range after breaking out, on the hourly/4-hour chart. Buying near the lows of that range is another opportunity to get in (again, wait for a consolidation near the bottom of the range and then a break out from consolidation to the upside).
All these potential entries are covered in the Price Structure strategy reading list.
Did you see the article Don't Take the Deposit Bonus From Forex Brokers? Reading that article may save you some headaches down the road.
Cory Mithell, CMT
Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.