EURUSD: Has It Tanked Enough Yet?

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The EURUSD currency pair has been in a strong downtrend since early May. The chart above is a 4 hour chart and has the following price characteristics:

  • Price channel is well defined with little over and undershoots
  • Meeting a trend definition of Lower Highs and Lower Lows

This is yet another Textbook Trend.

However, the currency pair reached a strong Weekly Support price level today which is around 1.2626. The confluence of support level combined with bottom of channel are good enough reasons for the pair to bounce up.

So What Am I Looking For?

Moving on from the bounce, EURUSD needs to BREAK the TRENDLINE (which happens to be the top of the channel – see green arrow) before a confirmation of change of trend. And by change of trend, I don’t mean that the pair will necessarily reverse and move up. It just means that the pair will move away from its current downtrend and likely do the following:

  • Move sideways before it reverse into an uptrend
  • Move sideways before it resumes into it’s original downtrend
  • Reverse sharply into an uptrend

Yes, prices can do anything if it that happens and this is the beauty (or pain) of trading. Don’t be impatient as the probability of a Trend Reversal Vs Resumption of Trend is about 50:50 at the moment. All we can do now is really stay aside and watch.

 

Thank you for reading and have a good weekend.

 

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