So, EURUSD broke this channel as well, and now it remains to be seen how the pair will act outside of it. We have drawn a resistance trendline from above that will likely provide some selling pressure, but still how low the price can go is hard to tell. Especially given that this Wednesday a Fed meeting and press conference is scheduled, so watch out for wild price swings during and after the press conference.
To the downside, the path is not clear of obstacles. Notably, a strong Fibonacci support zone rests at 1.1075 (orange line) and immediately below it at 1.1040 the August low provides additional support. Maybe the pair will accelerate to the downside if it breaks through these 2 levels.
From the 4h chart, we can better see why 1.1075 is a strong Fibonacci support zone. A nice Gartley pattern has formed and we now need to see how the pair will trade around the support area of the pattern at 1.1075. A bounce will mean a potential reversal and if the market just blasts through it then the downtrend may gain even more momentum.
The middle weekly pivot point stands at 1.1195 which is the same as the most recent previous lows on this chart, hence the probability is high that the market will first retrace up to test both the weekly pivot and the lows near 1.12. Selling around this level will be the ideal scenario for a short trade.
The 1-hour chart just confirms how important is the resistance area around 1.12. Now, of course, we are assuming that the pair will retrace up to 1.12, and while that is very likely it doesn’t mean that it will certainly happen.
However, if it does, then EURUSD will meet strong resistance here because the broken support trendline of the blue channel (daily chart) plus a falling trendline and the prior lows are all converging around 1.12.
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I've been a professional trader for over 5 years.
Currently I work as forex analyst for different investment companies.
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