EURUSD Falling Towards Major Support
The EURUSD has been on a decline since February 2018 and appears as though it may continue its descent towards the major support level at 1.0462.
Brexit may have a part to play in the decline but whether it does or not, we want to pay attention to the charts because the charts do not lie.
The December 2016 low to the February 2018 high is a 100% Fib Extension of the July 2012 low to the May 2014 high. After hitting the Fib Extension price started to move back to the downside.
Although we have seen a 12% drop in price since February 2018, price is still within a 4+ year period of consolidation. Even if we do see price make contact with the major support level at 1.0462, a breakout is not guaranteed. Price may bounce off support and continue to consolidate for much longer.
What we do know is that the longer price consolidates for, the bigger the move we can expect in the direction of the breakout. 4 years is a really long time for price to consolidate, so a break below support may see a big trend emerge which may even be larger than the 25% decline we saw in 2014/2015.
Remember that round numbers (RN) are also support/resistance zones and we have the 1.0000 RN 462 points below the major support level, but a strong trend will make light work of this RN.
A death cross occurred in August 2019 which is a sign of potential weakness to come. It is now a waiting game to see how price behaves over the coming days and weeks.
If we see a break of support at 1.0462 then we will start to consider shorting opportunities.
As always, keep it simple, keep it Sublime.
Brexit may have a part to play in the decline but whether it does or not, we want to pay attention to the charts because the charts do not lie.
The December 2016 low to the February 2018 high is a 100% Fib Extension of the July 2012 low to the May 2014 high. After hitting the Fib Extension price started to move back to the downside.
Although we have seen a 12% drop in price since February 2018, price is still within a 4+ year period of consolidation. Even if we do see price make contact with the major support level at 1.0462, a breakout is not guaranteed. Price may bounce off support and continue to consolidate for much longer.
What we do know is that the longer price consolidates for, the bigger the move we can expect in the direction of the breakout. 4 years is a really long time for price to consolidate, so a break below support may see a big trend emerge which may even be larger than the 25% decline we saw in 2014/2015.
Remember that round numbers (RN) are also support/resistance zones and we have the 1.0000 RN 462 points below the major support level, but a strong trend will make light work of this RN.
A death cross occurred in August 2019 which is a sign of potential weakness to come. It is now a waiting game to see how price behaves over the coming days and weeks.
If we see a break of support at 1.0462 then we will start to consider shorting opportunities.
As always, keep it simple, keep it Sublime.
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