EUR/USD Breaks Below Support, 1.2300 Is The Catalyst
Shain Vernier • 2 min read
The EUR/USD is in a holding pattern near the 1.2300 handle. Economic data releases during the U.S. overnight and pre-market hours have promoted a stalemate between today’s market participants. Is the EUR/USD ready to continue Wednesday’s downtrend, or will it settle near current levels before the holiday weekend?
In a live market update from yesterday, I outlined a scalping plan from support in the EUR/USD. It was a resounding failure, but did illustrate two important elements of active trading:
- Stop losses save money.
- Do not risk the farm when going against a trend.
The long from 1.2326 only produced a three pip positive move before sustaining a 27 pip draw. The quick stop out at 8-12 pips saved money in the short-term and took risk exposure related to the prevailing trend off of the table.
The biggest rule in active trading is this: As soon as your trade is a confirmed loser, get out. Simple as that.
At press time, the EUR/USD is threatening to extend the current bear trend below the 1.2300 handle. When trading horizontal levels, it is important to remember that when support areas are compromised, they become fresh resistance. We saw this phenomenon earlier today, as Wednesday’s downside support has acted as today’s topside resistance.
Wednesday’s break below support was a bold move from a market driven by the strong U.S. GDP report. Today’s action is beginning to look very similar. A decent collection of U.S. economic metrics is bringing more USD backers to the table.
Here are the levels to watch for the remainder of the session:
- Resistance(1): Daily SMA, 1.2330
- Resistance(2): 20 Day EMA, 1.2332
- Resistance(3): Bollinger MP, 1.2336
Overview: It appears as though the EUR/USD may trend even lower. However, there are no primary market moving events scheduled for the next 24 hours and tomorrow is Good Friday. I fully expect this market to slow down as the day wears on.
For now, I am in wait and see mode going into the Friday session.