In our previous EUR/USD forecast, we discussed EUR/USD price making a breakout from a range that it was held inside of for two weeks. The price did make its breakout on Wednesday, after testing the $1.05825 resistance three times.
The same day, the pair formed a bearish pin bar after which the price made a breakout to the downside.
Post breakout, we can see a 177 pips candle on Thursday's chart, that took the price to the first support level at $1.03920. The lowest price level reached was $1.03503.
EUR/USD price then made a retrace above $1.04000 on Friday, which is where traders cashed out after a strong move, getting out of trades before the weekend.
What we have now is a clean situation for the bears. The price has broken below range and the break was not confirmed by the price. So, we can expect to see the price moving higher, close to the $1.05000 resistance level and from there look for bearish price action signals at $1.04700 as a high for the price on the retrace.
There is room for more testing candles on the lower side because the current support level is strong support and the price is strongly pushed from the upper side. So, we could see the price staying here for a while until we see bulls or bears weaken in this battle before confirming future direction.
Next support is at $1.02975 which the price could try to reach. But, final support—where the price is heading—is $1.01368 which is the low of the downtrend channel.
Now's the time to wait for the retrace to higher levels and from there look for a sell signal around $1.05000, which is where the price will find strong selling pressure and will have a hard time breaking above.