- The euro attempted to recover a bit during the early hours on Tuesday, as we continue to look for some type of bottom.
- The 1.0950 level has been important multiple times and is essentially an area that I think market memory comes into play.
- It was resistance multiple times this year, and in the past, it's been support.
- In fact, I would suggest that the market has a zone of support and resistance between the 1.09 level on the bottom and the 1.10 level on the top. And we're just testing that area to see if the trend can hold as it has many times before in the past.
When you look at the euro, the 1.12 level has offered a significant amount of resistance, and we ended up forming a large double top or M pattern. And therefore, a lot of traders will be looking at this through the prism of whether or not we can break above there. Whether or not that was actually a trend changing double top. If we break down below the 200 day EMA, which is currently just underneath the 1.09 level, then I think that confirms the downtrend. We will probably go looking to the 1.06 level.
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If we can rally from here, and especially if we can take out the top of the candlestick from the Friday session, that would negate everything that happened after the jobs report in America, and more likely than not send the euro looking to the 1.12 level above, which of course has been such a headache for buyers. All things being equal, this is a pair that does tend to go back and forth between large round numbers, so pay attention to that as well. Because of this, the market is probably one that you need to look at through the prism of short-term back and forth trading or could also serve as a proxy for the US Dollar Index.
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