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Christopher Lewis
EUR/USD

The Euro has initially tried to break down below the 1.17 level but then turned around to bounce a bit. This is a sign that the market is trying to find its footing, but we had recently broken down through a major uptrend line. The uptrend line had been very reliable for some time, but as we breakdown through there and then reached towards the bottom of that uptrend line to confirm the “market memory.” Because of this, I do think that it still likely to be a scenario where you look to short signs of exhaustion on shorter-term charts.

EUR/USD Video 19.10.20

Looking at this chart, the question now is whether or not we can finally break out above the uptrend line again. If we do not, then it is obvious that we will continue to sell off, at least in the short term. I believe that breaking below the 1.17 level opens up the door to reaching down towards the 1.16 level, which is of course where we had bounced from. We are currently going back and forth around the 50 day EMA, and that indicator is flattening out, showing that the market is not quite ready to make a huge move.

Nonetheless, I think that there are a lot of concerns out there when it comes to global growth and geopolitics, so that could drive up the value of the US dollar in general which of course will show itself here as well. To the downside, I think that we could find a “floor the market” closer to the 1.15 level as the 200 day EMA is racing towards there. If we were to rally from here, we have a lot of work to get past the recent topping pattern, meaning that there is noise all the way to the 1.20 level.

For a look at all of today’s economic events, check out our economic calendar.

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