Trading Scenario: As we look into charts this week, EURUSD made a huge drop last week from 1.3333 to 1.2734. We have got a huge bearish engulfing candle on weekly charts, which engulfed 3 weeks price action. EURUSD is now bouncing off the key support level at 1.2740.
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Last week market made a high of 1.3333, earlier we suggested 1.3303 would cap this pair for any further rise. We did not see any of daily candles closing above 1.3303, which signifies the reversal and price being rejected.
EURUSD is still trading within the support of bullish trendline on daily chart, which we still have to keep in mind even though we are looking to sell rallies in this downtrend. This bullish trendline support comes in the region 1.2700, which could be a critical level to watch for the price to react.
If EURUSD was able to break below 1.2700 then momentum picks up on this pair for downward extension targeting towards 1.2600, 1.2420 & 1.2200
Any bounce on the upside off this support may take EURUSD to 1.2875 level before getting any selling pressure, break of 1.2875 will open up doors targeting 1.2960 to 1.3000 region
Based on bearish weekly close, it has formed a reversal formation of bearish engulfing pattern and it made a lower low and lower high. All these things signifies bearishness and downward risk on this pair at this point. Considering all of these factors we will stay bearish and will look to sell any rallies on EURUSD below our trend reversal level which comes in at 1.3310
Entry Strategy: Selling rallies in downtrend at our suggested resistance levels
Trade Suggestion: We will look to go short around 1.2850 - 1.2875 level, if we see any reversal targeting 1.2800, 1.2740 & 1.2600.
Alternatively if price was able to reach 1.2960 - 1.3000, we will sell into rallies if we see any reversal targeting 1.2900, 1.2800 & 1.2740.
Alternate Trade Suggestion: If Price holds the key support level and bounces of that at 1.2740 , Aggressive traders will look to go long targeting 1.2800, 1.2850 & 1.2875
Trend Direction: Bearish
Trend Reversal Level: 1.3310
Key Support Levels: 1.2740, 1.2700, 1.2600, 1.2420, 1.2200
Key Resistance Levels: 1.2875, 1.2960, 1.3000, 1.3040, 1.3105, 1.3205, 1.3303