EUR/USD:Testing top of short-term bearish price channel

Jul 26, 2021

The EUR/USD is currently testing the top part of a short-term bearish price channel. It would not be a surprise to see the price break out of this channel, considering the slope of the downward trend. Therefore, I would not consider it a strong bullish signal, but it can still be a signal to go long. I would perhaps wait for a close and then a couple of bars above the resistance line before going long. Considering I have a bullish euro/dollar bias (more on this at another time), I would need to gain some confidence before going long during a down trend. There is also a short-term bottom at around 1.1757. So, if the resistance holds, I can also wait for the price to approach this level. Nonetheless, this downward momentum is good reason to place some tight stop orders on any new long position that we itch to take here.

Jul 28, 2021

Note

So, as a follow-up on this idea, we effectively had a close and price action above the hourly price channel. However, it never really gained momentum. It is very unlikely that anyone got in a successful short-term trade on this one. At most, it would've been a 20-pip gain and an hourly chart wouldn't be very helpful on that one. Thus, the strong suggestion to place tight stop orders -if you really wanted to go long- was the right one.

We even see that resistance became support for a little while before it was perforated. This calls for drawing up a new price channel with a wider trading range, whereas the prior one was narrowing.

At the time of writing, we have FOMC chair Powell starting his press conference. The FOMC press release sparked some volatility, spiking to meet support. The support at 1.1757 is holding up, although I'm not seeing it as a very strong one. We'll have to see where it goes from here.