The EUR/USD is trending south following a breakout beneath a key support level. Rates are falling dramatically mid-way through the U.S. forex session, with 1.1200 rapidly coming into view. Is the slide going to stop anytime soon?

From a fundamental standpoint, the next 24 hours are capable of ceasing the bearish pressure. The results of the U.K. Bank Stress Tests are due out, as is U.S. Core Personal Consumption (Q3) and GDP (Q3). While sellers are currently dominating the action, anything can happen between now and 8:30 AM EST Wednesday morning.

EUR/USD Technical Outlook

Today’s action in the EUR/USD has been definitively bearish, extending the losses of the past two sessions. In a live market update from Monday, I outlined the importance of a critical 38% Fibonacci support level. The level gave way and the move south was on.

There are two levels on my radar for the immediate future:

• Support(1): 78% Current Wave, 1.1275
• Support(2): Spike Low, 1.1215

Bottom Line: The selling is heavy in this market as exhibited by the bearish trends present on intraday time frames. Should it continue, a long counter-trend trade from the Spike Low will come to pass. Until elected, I will have buy orders queued up from 1.1217. With an initial stop at 1.1189, this trade produces 25 pips using a sub-1:1 risk vs reward ratio.  

Again, this is a counter-trend trade, so the use of moderate leverage is advised.