The EUR USD took out its most recent swing bottom at 1.2994, reaffirming the downtrend and setting up the market for a potential wash-out to the downside. For weeks, traders have been eying 1.3000 as a major support area. Over the past month this area has been violated twice without much fanfare. Now that sentiment appears to be shifting to the downside, the selling pressure at this price level may be too much to withstand.
Technically, the main range is 1.2623 to 1.3485. This range has created a retracement zone at 1.3054 to 1.2953. Overnight, traders pushed the market through 1.3000, but the 61.8% level at 1.2953 proved to be strong support. If intraday short-covering does prevail, then look for a rally back to the 50% level at 1.0354.
Uptrending Gann angle support from the 1.2623 bottom is at 1.2963 this week. This angle combined with the 61.8% level forms a support cluster at 1.2963 to 1.2953. This key area was tested overnight, attracting profit-taking and fueling a short-covering rally.
Traders should watch this support cluster all week because it is the area to overcome in order to trigger the washout to the downside. Once this zone is cleared, short-sellers should pile on the Euro triggering a possible break into the next uptrending Gann angle at 1.2793. In addition, old support should become new resistance.
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EUR/USD Tests Make Or Break Price Zone
Published 05/07/2012, 06:26 AM
Updated 05/14/2017, 06:45 AM
EUR/USD Tests Make Or Break Price Zone
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