EUR/USD Considers A Break Of October's Low
|EUR/USD has essentially traded within a 500-pip range since July, with false promises of a break either side. But, if we take a closer look at what price is telling us, there’s an argument for a downside break.
We can see on the daily chart that momentum leading into the range was bearish and the 50-day average is beginning to slope lower again. Trend theory assumes a bearish breakout, although another promising sign for bears is that since the September high (1.1815) bearish momentum has been increasing.
Admittedly, price action has not been without its twists and turns having printed six prominent reversals over the last nine weeks. But it’s interesting to note that five of the last six reversals have been pinbar reversals, three of which have been bearish. Furthermore, the bearish pinbar at 1.1615 has respected a 50% Fibonacci retracement and 50-day average to mark a likely swing high. If price can clear the October low we think the odds favour a run towards 1.1300 and, possibly beyond.
Whether you decide to trade the break or hang back to see if prices consolidate below the breakout level, this could be one to watch as we head into next week.
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