Not surprisingly, the EUR/USD bounced in the London session making new weekly highs after the price closed above 1.0920 on Friday. The pair was given an additional boost after a good German IFO report. The German IFO represents one of the most important indications of overall economic health. It is an early sign of future investing and spending.
The pair touched 1.1113 and then reversed. Currently, the price is contained within a neutral territory just above the rising wedge and below double trend line confluence. If the pair proceeds to test 1.1113, it could be an early sign of reversal towards 1.0920 and then 1.0875 and 1.0780. We can see (in the blue rectangles) historical sales which are making double trend line confluence. It is also rejecting H4 camarilla PP and 78.6 fib. If we get H4 close below 1.1080, it could give additional momentum to bears towards lower targets.
For this scenario to be valid, however, 1.1180 must stay unbroken (H5 and 88.6). We need to pay attention to the highlighted yellow area (1.1115-1.1080-1.1055) as the next price movement will depend on the rejection of 1.1115, the H4 closing below 1.1080 and a momentum break of 1.1055. If the price fails to do that, it could proceed towards 1.1185, boosted by the month's end profit taking and general lower liquidity during the holidays.
