The low was a key level

Looking at the WIDE daily chart of the EURUSD, what do we see?

  1. There is a triple bottom going back to April 2015 (see Red circles). On April 13, 2015 the low was at 1.0520. On December 3rd, the low reached 1.05187. Last week on November 24th, the low reached 1.0517. That is close enough to a triple bottom. Needless to say that level is a KEY level going forward (even if it is not tested for 10 years from now).
  2. The 1.0550-67 area is another key AREA. Why? The low daily close going back to April 2015 is 1.0550. Also there are 10 day lows where the price bottomed in that fairly narrow range.
  3. Now there were 6 days going back to April 2015 when the price went below the 1.0550 level as well, but none (zero) closed below the 1.0550 level.

What I see is that the 1.0517 to 1.0567 is a key area. If you were to break it up the 1.0550-67 is key level #1, and 1.0517-20 is key level #2.

So this week when the price went down to 1.05518 can we be too surprised that there were buyers? No. The price action tells us that the area was a key support level and buyers came in against that level.

What else can we learn from what we see in the charts for the EURUSD?

Well, wrilling down to the hourly chart, most of the activity going back to November 17th has been between 1.0550 and 1.0665. I outline that area with the Red Box in the chart below.

ON Monday this week, there was a peek above the upper extreme. It was quick. It failed. Today there was a move above the top extreme once that failed (could be squaring up before employment). We are currently trying to get and stay above the area right now. We need a close above to confirm a more bullish bias. We are also trying to get and stay above the 100 bar MA on the 4-hour chart (blue step line in the chart below). That MA is currently at the upper extreme of the Red Box increasing the 1.0665 levels importance.

Now it is Friday so traders have more weekend risk (***Italy referendum too). So trading now is not recommended,. However, the technical levels are starting to develop and there is some bullishness in the charts as welll

  • The daily chart has a triple bottom and found support at the 1.0550 area this week.
  • On the hourly chart, the pair has a Red Box that defines a bullish breakout point PS today the low stalled at the 100 hour MA line (blue line in chart below) and the price is above a downward sloping trend line (see thick red line on the hourly chart below).

If in the new trading week, the price action can continue to find support on dips and get and stay above the Red Box, the upside has room to roam (even if it goes down first, that Red Box is important going forward).

The next key target on the topside is the January 2016 low (the "old" year low) at 1.0708. Above that and "old low support area" on the daily chart at 1.0777-1.0821 will be a key upside target area. If you recall, that area was the bottom of another Red Box (this one on the daily chart).

If not and we start to trade more in the Red Box (ii.e. lower), we go down to test the key low area at 1.0550-67 with a break of that, having a shot to take out that triple bottom at 1.0517-20.

The story line in taking shape. Is there another push before year end?