Since GBP/USD seems to be breaking higher instead of sticking to its long-term downtrend, I thought I should focus on EUR/USD’s range for now.
As you can see, EUR/USD bears are hard at work around the 1.1075 area that happens to line up with this week’s top weekly ATR (WATR).
But wait, there’s more! Notice how 1.1075 also lines up with a support and resistance area on the 4-hour time frame. Coincidence? I don’t think so!
The cherry on top of this sweet deal is that stochastic is hinting that EUR/USD is now “overbought” on the chart.
We’ve got a bunch of potential economic catalysts lined up tomorrow including Germany’s factory orders and euro zone’s retail sales numbers. Significant weaknesses in either or both reports could drag the euro lower against the dollar.
On the other side of the trade, the dollar might regain some of the pips it had lost earlier this week after Trump let it slip that he has “no deadline” on making a trade deal with China.If the market grapevine is any clue, we could hear positive trade-related updates from “sources” very soon so that U.S. equities (and the dollar?) could recover.
For now, I’m looking into shorting EUR/USD as soon as it breaks below its current consolidation. I’ll be aiming for the 1.1000 range support area though I’ll watch how the pair reacts to last week’s high (1.1032) closely.
What do you think? Is it time for EUR/USD to trade lower? Or will euro bulls follow the pound bulls’ path and force an upside breakout of the 4-hour range and the downtrend on the daily chart?
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