Monday’s session did just that. Sellers challenged 1.1530 but were unable to penetrate the level. That bounce from 1.1530 has led to today’s retest of the 1.1630 area.
Keep in mind that both areas are being respected on a daily closing basis (New York 5 pm EST). In other words, I wouldn’t suggest you attempt trading a break from either level on the 1-hour or even 4-hour time frame.
The answer lies at 1.1530 support and 1.1620 resistance. A daily close above 1.1620 would expose 1.1730 followed by 1.1830. On the other hand, a daily close below 1.1530 would most likely pave the way for another run at the 1.1300 support handle.
It’s going to take a daily close below 1.1530 or above 1.1630 (now closer to 1.1620) to get the job done. Until that time, patience is key.
While you could attempt trading this range, there simply isn’t enough real estate in my opinion which means your risk to reward ratio will suffer. You’re also bound to get it wrong at least once which may wipe out any profit you make.
At the moment, I’m finding it difficult to maintain a directional bias. I still have my EURUSD short from 1.1642, but I’m not overly convinced yet. I was looking for the August 31st breakdown to carry some bearish momentum, but so far that isn’t the case.
Another interesting development was GBPUSD closing above descending channel resistance yesterday. While the two (EURUSD and GBPUSD) aren’t as correlated as they were years ago, they do still share some similarities.
All one needs to do is look at the EURGBP daily chart to see how the two currencies have been gridlocked for the last twelve months.