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Technical Analysis

EURUSD Trading Around Long-term Resistance Levels

16-Nov-2022 07:12:06

Last week EURUSD exploded higher on the US CPI release, and with the surge the outlook for a bear-flag to continue developing went out the window. Heading into the release it was a scenario I had painted, and was clearly a wrong one.

The good news is that without the full development of the sequence as described, no official trigger ever took place and thus no position established. Where does this leave us now? The rally has taken the Euro into an interesting spot from a macro standpoint.

The low from 2017 at 10340 lies not too far below current levels, it was validated as having intermediate/short-term relevance back in the spring when it first acted as support and then resistance. With price currently above the level there is a small breach, but the key will be whether EURUSD can hang on or it if is merely a quick pass-through before a reversal.

The high today was just slightly over the 200-day MA, a threshold the Euro has not seen since June 2021. This makes for the first test in quite some time an important one. The likelihood is viewed as high that we at least see some type of set-back develop around the 200. With that in mind we may see the EURUSD also close below the 10365/40 area.

If this happens we could have a nice reversal set-up. Whether it is amounts to anything more than a pullback is of course to be seen, yet, but it is possible it marks an important high from a longer-term standpoint. For now, viewing the current set-up from a short-term lens and then taking it from there depending on how things play out.

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