Hey, guys! Look at EUR/USD trading just above 1.0800! Are we looking at an upside breakout in the making? Or an opportunity to enter a downtrend?
As you can see on the chart below, EUR/USD is currently trading at the 1.0800 major, MAJOR psychological level. This is a big deal because the level marks the resistance of what looks like an ascending triangle on the chart.
And, if you zoom out a bit and consider price action from last year, you can also see that the area is right at a falling trend line resistance on the daily time frame. Talk about being the center of attention!
By the looks of yesterday’s candle though, we can see that there’s a huge chance that the pair will trade higher over the next few trading sessions. But is it enough to inspire an upside breakout for the pair?
Or are we looking at a fakeout in the making and an opportunity to jump in on the euro’s longer-term downtrend?
Fundamentally, there’s also room for more euro strength. I’m still a long-term dollar bull, of course.
In fact, I believe that the Fed and ECB’s diverging monetary policies, Uncle Sam’s strong economic reports, and uncertainty surrounding the upcoming elections in the euro zone will eventually drag this pair lower.
But that’s for tomorrow. Today, Macron edging out Le Pen in the latest Presidential debates has spurred a bit of optimism for the common currency.
Meanwhile, the dollar took steps back against its major counterparts as Wall Street (and forex market) players are starting to wonder if Trump can implement his “phenomenal” tax plans and infrastructure projects as soon as he promised.
For now, I’m waiting to see if EUR/USD can decisively break above the 1.0800 level. The top weekly ATR, 200 SMA, and overbought stochastic signal could pose challenges for the bulls, so I’m really in no hurry to place buy orders.
Besides, I can always wait for a break-and-retest opportunity if it does break above the triangle/trend line that I’m watching.But if the bears start flexing their trading muscles and I start to see bearish candlesticks below the 1.0800 handle, then I’ll be ready with my sell orders.
The 1.0600 area is a good area for initial profit targets, though I’ll also watch out for possible trips to its previous lows near 1.0400.
What do you think? Which way will EUR/USD go? Will it break above the resistance levels? Or will the bears step in to save the day for the dollar?
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