Trading Scenario: As we look at the charts, last week EURUSD been mostly in sideways by finding hard to break 1.3000 key level and made a high of 1.3107 and failed to sustain above that. If we observe closely, EURUSD has a bearish daily trendline coming in at 1.3100. EURUSD failed to break this trendline and marginally trading below that now.
According to our analysis from past few weeks 1.3000 to 1.3100 range could be a potential resistance or reversal zone. EURUSD is still in this range, which signifies that potential reversal is still expected unless it breaks above 1.3100.
If we look at friday closing, the daily candle ended up as a hanging man, which could be a caution, before that we had two Doji's on this pair. We must be cautious on this pair that it might make a downward extension if it fails to break 1.3100 critical resistance level. EURUSD is still in a bullish channel, but momentum seems to be slowing down. Most likely this could be a turning point for downward correction for the rise from 1.2152 to 1.3107.
The high EURUSD made last week 1.3107 is 61.8 fib level from it fall from 1.3817 to 1.1875 and also 38.2 fib levels comes in at this region from its fall from 1.5143 to 1.1875, which supports for further decline of any move upwards and at the same level we are getting daily bearish trendline in place which adds fuel for price to decline.
Keeping all these factors in mind our scenario is if EURUSD trades below 1.3100 significant key level, we anticipate EURUSD to extend lower to its key support levels initially to 1.2750, if EURUSD breaks below 1.275o doors will open up targeting 1.2640 & 1.2500.
In terms of any further downward extension 1.2500 will be a key support level. If EURUSD fails to trade above 1.3100, mostly likely this pair may find support around 1.2550 to 1.2640 region, to make any further rise.
If EURUSD breaks below 1.3000 key level, where bullish channel support also comes into place, doors will open up targeting 1.2900, 1.2800, 1.2750, 1.2640 & 1.2500.
If EURUSD breaks above 1.3100 doors will open up targeting 1.3303, this level may potentially cap any further rise on this pair.
Note: 1.3100 is a significant key level for this pair.
Entry Strategy: Wait for the price to break 1.3100 to go long or 1.3000 to go short.
Trade Suggestion: If EURUSD breaks above 1.3100 and was able to sustain go long targeting 1.3200 & 1.3303. ( Personally we recommend to be extra cautious and conservative in this )
Alternate Trade Suggestion: If EURUSD breaks below 1.3000, go short targeting 1.2900, 1.2800, 1.2750, 1.2640 & 1.2500.
Trend Direction: Bullish ( Downward Correction Expected )
Trend Reversal Level: 1.2870
Key Support Levels: 1.3000, 1.2900, 1.2750, 1.2640, 1.2500, 1.2350, 1.2150
Key Resistance Levels: 1.3100, 1.3225, 1.3303.